Gap (GPS) PT Lifted to $23 at UBS, Remains 'Sell' Rated
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UBS analyst Michael Binetti lifted his price target on Gap, Inc. (NYSE: GPS) to $23.00 (from $16.00) but maintained a Sell rating, saying while EPS was in-line November is off to s slow start.
Binetti "We're trimming our 4QE EPS to $0.43 from $0.45. Like most retailers so far, GPS signaled a slow start to Nov SSS. GPS noted that traffic has decelerated from 3Q - making it tough to assume positive SSS in 4Q, even against an easy -7% comparison (we forecast 4Q SSS -1.4%). That said, it's early in Nov, and election distractions and a lack of early cold weather have likely been headwinds that could easily dissipate for the group (and the majority of holiday sales are still to come)."
He added, "We're raising our 2017E EPS to $2.00 from $1.88 to reflect better flow-through of GMs in 1H17 (now forecasting 36.7% GM for '17 vs 35.5% previously). That said, GPS acknowledged that after several years of tight expense management, the company would need SSS to turn positive to leverage SG&A from here."
Shares of Gap, Inc. closed at $30.71 yesterday.
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