Sterne Agee Downgrades Gap, Inc. (GPS) to Neutral

Sterne Agee downgraded Gap, Inc. (NYSE: GPS) from Buy to Neutral with a price target of $40.00 (from $52.00).

Analyst Ike Boruchow commented, "Downgrading GPS to Neutral from Buy as the inflection at the Gap brand is not progressing as we expected, leading to significant pressure on both sales and margins. New merchandise/marketing in September/October failed to trigger a revival, and we no longer see a clear path to improved performance. Making matters worse, CEO Glenn Murphy (one of the most respected leaders in retail) announced his resignation. All in, while GPS is outperforming peers, we can no longer justify a Buy rating."

The firm is cutting Q3 EPS estimate to $0.68 (from $0.81). FY14/FY15 EPS estimates are now $2.64/$3.00 (from $2.94/$3.42).

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 $41.90 yesterday.

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