Jefferies Comments on Gap (GPS) Q3 Results; Sees Strong Holdiay Promotions, GM Compression Priced In
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Price: $24.55 --0%
Rating Summary:
14 Buy, 23 Hold, 3 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 12 | Down: 23 | New: 22
Rating Summary:
14 Buy, 23 Hold, 3 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 12 | Down: 23 | New: 22
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Jefferies maintains a Buy rating and $25 price target on The Gap (NYSE: GPS) following third-quarter numbers.
Earnings for Gap were 38 cents per share, versus Jefferies views for EPS of 37 cents. Gross margins contracted 450 basis points, more than the 350 Jefferies was expecting.
Gap is expected to be "highly promotional" for the holiday season, with particular emphasis on Old Navy. Inventory control has tightened according to third-quarter data, and gross margin pressure from increased promotions should already be factored into the stock.
Looking ahead, Jefferies sees at least three positive catalysts, including, "1) ~$1 cotton prices, 2) design team and mgmt changes at the Gap brand which should begin having a more positive impact on the product this Spring, and 3) compares become much easier in 2012."
Some of Jefferies numbers have been adjusted. For fiscal 2012, Jefferies boosted its fourth-quarter EPS from 47 cents to 48 cents, and 2012 from $1.58 to $1.60.
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 $19.25 yesterday.
Earnings for Gap were 38 cents per share, versus Jefferies views for EPS of 37 cents. Gross margins contracted 450 basis points, more than the 350 Jefferies was expecting.
Gap is expected to be "highly promotional" for the holiday season, with particular emphasis on Old Navy. Inventory control has tightened according to third-quarter data, and gross margin pressure from increased promotions should already be factored into the stock.
Looking ahead, Jefferies sees at least three positive catalysts, including, "1) ~$1 cotton prices, 2) design team and mgmt changes at the Gap brand which should begin having a more positive impact on the product this Spring, and 3) compares become much easier in 2012."
Some of Jefferies numbers have been adjusted. For fiscal 2012, Jefferies boosted its fourth-quarter EPS from 47 cents to 48 cents, and 2012 from $1.58 to $1.60.
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 $19.25 yesterday.
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