Gap, Inc. (GPS) PT Raised to $20 at JPMorgan on Old Navy Promise and Athleta Performance

JPMorgan analyst Matthew Boss raised the price target on Gap, Inc. (NYSE: GPS) to $20.00 (from $17.00) while maintaining a Neutral rating after the company reported 4Q EPS of -$0.02, well ahead of the Street at -$0.14. Upside was driven by +2.3% revenue growth y/y vs the Street consensus for 1.4% on +3% same-store-sales vs. 2019.

The analyst stated "We see potential for Old Navy to continue to grow market share across numerous categories (denim, dresses, active, kids/baby) and Athleta remains well positioned to capitalize on the athletic apparel sector growth (high-single-digit+ run rate coming into the COVID-19 crisis). On the bottom line, mgmt's 2023 analyst day plan presents the opportunity for GPS to achieve a double-digit EBIT margin profile, though we note GPS has elevated its spend on marketing, technology, infrastructure, and supply chain investments, which have collectively offset underlying GPM improvement driven by ROD leverage and product margin improvement."

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