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On Tuesday, BofA Securities analyst Christopher Nardone adjusted the price target for Carter's (NYSE:CRI) shares, reducing it from $53.00 to $50.00 while maintaining an Underperform rating. The stock, currently trading near its 52-week low at $51.87, offers a substantial 5.81% dividend yield and trades at a P/E ratio of 8.2. According to InvestingPro analysis, the stock appears to be trading below its Fair Value.
The change follows the announcement that Michael Casey will retire as Chairman and CEO of Carter's, effective immediately. Casey had served as CEO for 15 years and has been with the company for over three decades. Although he is stepping down, he will remain in an advisory role until February 28th to assist with the leadership transition.
In response to Casey's departure, Carter's has commenced a search for a new CEO, focusing solely on external candidates. During this period of transition, Richard Westenberger, who is currently the CFO and COO, will take on the role of interim CEO. Westenberger's history with Carter's dates back to 2009 when he joined as CFO and expanded his responsibilities to include COO last year.
BofA's Nardone believes that the company will experience a smooth transition, citing Westenberger's extensive knowledge and long-standing tenure at Carter's. The interim CEO's familiarity with the company's operations is expected to support a seamless change in leadership.
The announcement of the CEO change and the subsequent price target adjustment by BofA Securities reflect a moment of corporate restructuring for Carter's. The company's decision to look for a new CEO from outside its current ranks suggests a potential shift in strategy or direction. Despite the transition, Carter's maintains strong fundamentals with a healthy current ratio of 2.21 and has consistently paid dividends for 12 consecutive years. InvestingPro subscribers can access 7 additional key insights about Carter's financial health and growth prospects through the comprehensive Pro Research Report.
As the market processes this executive shake-up and the new price target from BofA Securities, investors will be watching closely to see how the company navigates this transition period and who will ultimately be appointed as the new CEO. With three analysts revising earnings upward for the upcoming period, InvestingPro data suggests the company remains on solid financial footing, maintaining profitability over the last twelve months.
In other recent news, Carter's, Inc. has announced the retirement of its CEO, Michael D. Casey, after over 15 years of service. Richard F. Westenberger will act as interim CEO while retaining his roles as Senior EVP, CFO, and COO. The company has also reaffirmed its fiscal year 2024 financial outlook and is expected to report Q4 and full-year 2024 results in February.
In terms of stock analysis, Citi has upgraded Carter's stock from Sell to Neutral, reflecting anticipated sales and margin pressures for the fiscal year 2025. Carter's has reported a 4% decline in net sales from the previous year, reaching $758 million, but surpassed its prior guidance. The company's operating income was reported at $77 million.
Carter's is optimistic about its growth strategies, despite a challenging retail environment and a decline in order demand. The company has invested $40 million in price reductions and $10 million in brand marketing, and it has returned $138 million to shareholders through dividends and repurchases this year.
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