Goldman Raises Numbers on Gap (GPS), But Keeps Sell as Cost Tailwinds Won't Last

Goldman Sachs bumped estimates and its price target on Gap, Inc. (NYSE: GPS) from $15 to $17 after Q4 results, but is keeping its Sell rating on continued challenges. Gap reported Q4 EPS of $0.44, which beat the firm's view of $0.41 and the consensus of $0.42, largely on SG&A.

The biggest positive in the quarter was an average unit cost benefit, Goldman notes. The firm said this is a sector-wide tailwind and they prefer to play other names like Buy-rated American Eagle Outfitters (NYSE: AEO), where the cost declines are "icing on top," which is not the case with Gap.

Goldman sees the cost declines as only a temporary buffer to secular headwinds that should continue to weigh on Gaps sales and net income.

The firm raised 2012 EPS from $1.53 to $1.56, 2013 from $1.50 to $1.70 and introduce 2014 EPS of $1.77

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 $23.52 yesterday.

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