UBS Raises Carter’s Price Target, Sees Upside Risk to Guidance

Core Viewpoint - UBS has raised its price target on Carter's to $40 from $33 while maintaining a Neutral rating, indicating a positive outlook based on operational improvements under new CEO Doug Palladini [1] Group 1: Earnings Guidance - Carter's fiscal 2026 earnings per share guidance aligns broadly with market expectations, with risks slightly skewed to the upside [1] - UBS believes that if operational improvements continue, Carter's could return to approximately $6.20 in earnings per share over time, compared to an estimated $3.25 for fiscal 2025 [2] Group 2: Valuation and Market Sentiment - The current stock valuation is approximately 13 times forward earnings, which could expand if earnings improve as anticipated [2] - The options market is pricing in a potential move of plus or minus 7.0% around the earnings event, higher than the historical average move of 5.2%, suggesting modestly skewed volatility risk to the upside [3]