Nomura Securities Maintains a 'Neutral' on Gap, Inc. (GPS); Top-line Was Better Than Expected for April
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Rating Summary:
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Up: 13 | Down: 14 | New: 11
Rating Summary:
14 Buy, 23 Hold, 3 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Nomura Securities maintains a 'Neutral' on Gap, Inc. (NYSE: GPS).
Nomura analyst, Paul Lejuez, said, "While the top-line was better than expected for April, margins were extremely weak and results for 1Q overall are below expectations. The most concerning part of the April sales release is mgmt’s comment about Average Unit Costs (AUC) significantly pressuring merchandise margins, even more than they had initially anticipated. We expect cost pressure to be most intense in 2H11; however, to hear that merch margins were already worse than expected in 1Q is concerning and shows GPS has fewer levers to pull to offset these increases. We’re reducing our ests primarily on lower merch margin: our F11E is now $1.68 vs. $1.78 previously and our F12E decreases from $2.07 to $1.93. We see share repo as the only driver of F12 EPS growth after a down F11."
For more ratings news on Gap, Inc. click here and for the rating history of Gap, Inc. click here.
Shares of Gap, Inc. closed at $22.93 yesterday.
Nomura analyst, Paul Lejuez, said, "While the top-line was better than expected for April, margins were extremely weak and results for 1Q overall are below expectations. The most concerning part of the April sales release is mgmt’s comment about Average Unit Costs (AUC) significantly pressuring merchandise margins, even more than they had initially anticipated. We expect cost pressure to be most intense in 2H11; however, to hear that merch margins were already worse than expected in 1Q is concerning and shows GPS has fewer levers to pull to offset these increases. We’re reducing our ests primarily on lower merch margin: our F11E is now $1.68 vs. $1.78 previously and our F12E decreases from $2.07 to $1.93. We see share repo as the only driver of F12 EPS growth after a down F11."
For more ratings news on Gap, Inc. click here and for the rating history of Gap, Inc. click here.
Shares of Gap, Inc. closed at $22.93 yesterday.
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