Carter's (CRI) | News Based Sentiment Analysis

• On October 1, 2025, Carter's adopted a "poison pill" stockholder rights plan after RWWM Inc. acquired a 16.86% stake in the company, signaling concern about a potential hostile takeover and aiming to protect shareholder value by preventing control without a premium offer.
• Following disappointing second-quarter 2025 earnings, where the company reported earnings per share of $0.17 – significantly missing analyst expectations – UBS lowered its price target from $32 to $26 on October 1, 2025, while maintaining a Neutral rating.
• Analysts at StockStory advised caution on October 3, 2025, highlighting lagging same-store sales over the past two years and projecting flat sales for the next 12 months, indicating weak demand and increased competition impacting profitability. At the time, Carter's was trading at $29.60 per share with a forward P/E of 11.3x.
• Carter's is anticipating its next earnings release on October 24, 2025, but analysts are forecasting a substantial year-over-year decrease of 52.44% in earnings per share, expecting $0.78 per share.

The Investment Story: October proved to be a challenging month for Carter's, marked by disappointing earnings, analyst downgrades, and concerns about future sales growth, prompting defensive measures against a potential takeover. These factors collectively paint a picture of a company facing significant headwinds.

What It Means for Investors: The combination of lowered price targets, a 'poison pill' adoption, and a steep decline in expected earnings suggests increased risk and limited near-term upside for Carter's investors. The flat sales projection and shrinking returns on capital indicate fundamental challenges that need to be addressed.

Looking Ahead: Investors should closely watch the October 24, 2025, earnings report to see if the anticipated 52.44% EPS decline materializes and to hear management's commentary on strategies to address the lagging sales and profitability. Any further developments regarding RWWM Inc.'s stake will also be crucial.

The Bottom Line: October's events highlight a period of uncertainty for Carter's. While the 'poison pill' protects against a quick takeover, the underlying business challenges – weak sales, declining profitability, and lowered expectations – pose significant risks for investors, making a cautious approach advisable.