Needham & Company maintains a 'Hold' on Gap, Inc. (GPS); Q3 Earnings Preview

Needham & Company maintains a 'Hold' on Gap, Inc. (NYSE: GPS).

Needham analyst says, "At ~13x our FY12 EPS estimate of $1.57, GPS is trading below the sector average of ~14x and slightly above its long term organic growth rate of 10% to 12%, which we think is a fair valuation at this time given significant margin pressures in F2H11 due to higher sourcing costs and lack of pricing power. While we think that product continues to looks better Y/Y, we are concerned that increased promotional activity at both Gap and BR (while effective traffic drivers) has trained the customer to wait for sales, eroding pricing power."

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 $20.17 yesterday.

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