Carter's Shares Down 7% Since Earnings; Here's Why The Stock Is 'Too Oversold'

Despite reporting a strong first-quarter earnings beat in late April, shares of children’s apparel company Carter’s, Inc. (NYSE: CRI) have declined 7 percent since then.

Oppenheimer believes Carter’s is oversold at this point, and with an Outperform rating and $105 price target, the company shows solid upside potential.

“We think strong replenishment continues in wholesale, plus CRI’s exposure to more resilient mass-channel than mall-bad department stores,” said Oppenheimer analyst Anna Andreeva.

The announcement of Gymboree’s Chapter 11 bankruptcy filing this week is seen to provide opportunity for Carter’s over the long term, with 450 locations set to close. Carter’s is currently the largest branded marketer of apparel for babies and young children in the US.

“Concurrently, Gymboree plans to clear through inventory starting 7/1. Given greater overlap with PLCE vs. CRI, higher discounting in near term likely bigger headache for PLCE,” said Andreeva.

Carter’s has grown EPS by 15 percent since 2012, and Oppenheimer said the company can continue its double-digit earnings growth trajectory, through e-commerce and international growth.

Shares of Carter’s were relatively flat in Wednesday trading.

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