Carter (CRI) is expected to maintain its fiscal 2024 guidance when it releases its Q3 results that are likely to be in line with or above management's guidance, UBS said in a note emailed Friday.

Based on its channel checks, UBS said Carter's fundamental trends remain soft, and thus it expects the company to stick to its fiscal 2024 earnings per share guidance of $4.60 to $5.05 on revenue of $2.79 billion to $2.83 billion.

The investment firm, however, sees downside risk to Street's fiscal 2024 EPS estimates due to a potentially lower gross margin than UBS expects, according to the note.

"At the same time, our view is sentiment leans bearish, but could be lower than we realize. So, even if [Carter's] gross margin disappoints and drives a guidedown, this could already be priced in. Thus we see the risks around the event as balanced," UBS said.

UBS said it forecasts Q3 EPS of $1.35 versus Carter's guidance of $1.10 to $1.35. It also estimates revenue of $753 million versus the company's guidance of $735 million to $755 million. Carter's Q3 results are unlikely to surprise investors, it added.

UBS maintained its neutral rating on the stock with a $57 price target.

Shares of Carter's were nearly 2% higher in recent trading.

Price: 61.73, Change: +1.05, Percent Change: +1.72