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Canaccord Genuity Maintains a 'Sell' on Gap, Inc. (GPS); Q2 Beats, But Operating Expenses Still A Hangover

August 17, 2012 10:10 AM EDT Send to a Friend
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Price: $39.00 +1.64%

Rating Summary:
    12 Buy, 20 Hold, 3 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 34 | Down: 12 | New: 36
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Canaccord Genuity maintains a 'Sell' on Gap, Inc. (NYSE: GPS) price target of $28.00 (from $26.00).

Analyst, L aura Champine, said, "GPS reported EPS of $0.49, $0.02 above our estimate and $0.01 ahead of consensus and the high end of prior guidance. The company benefited from a 295bps yr./yr. gross margin improvement, better than our estimate of a 100bps increase. GPS is progressing through what management has labeled an investment year, which resulted in a 95bps increase in the operating expense rate driven primarily by elevated marketing spending. We had forecast 50bps of expense leverage. We continue to believe shares have been overbought with the stock appreciating 85% YTD versus the S&P 500 index +13% and the RLX index +22%. We still have concerns regarding H2 margins, particularly heading into the back-to-school and holiday seasons."

For an analyst ratings summary and ratings history on Gap, Inc. click here. For more ratings news on Gap, Inc. click here.

Shares of Gap, Inc. closed at $34.34 yesterday.




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