Is Carter's Really Worth Carrying?

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Carter's (NYSE: CRI  ) gained 1% today after Goldman Sachs upgraded the children's apparel company from neutral to buy.

So what: Along with the upgrade, analyst Taposh Bari boosted his price target on the stock to $89 per share (from $77), representing about 17% worth of upside to yesterday's close. While conservative investors might find the stock's year-to-date outperformance a bit worrisome, Bari believes that Carter's certainly does deserve a premium valuation based on its strong management team and industry-topping growth.

Now what: Goldman expects Carter's to post accelerated EPS increases into 2014. "Going forward, sources of upside include 1) strong revenue growth, 2) reduced SG&A and capex spend, 3) a positive international growth inflection and 4) an optimized capital structure," Goldman said in a report. With the stock hitting a new 52-week high today and trading at a P/E of around 30, however, I'd wait for a wider margin of safety before making a significant long-term commitment.

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