Janney Montgomery Scott Maintains a 'Neutral' on Gap, Inc. (GPS); Ongoing Buyback Activity Will Support EPS
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Price: $24.55 --0%
Rating Summary:
14 Buy, 23 Hold, 3 Sell
Rating Trend:
Up
Today's Overall Ratings:
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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Janney Montgomery Scott maintains a 'Neutral' on Gap, Inc. (NYSE: GPS) price target of $24.00.
JMS analyst says, "We expect ongoing negative comps and gross margin pressure in 1H12, but believe ongoing buyback activity will likely support EPS. Management indicated that it would resume “normalized” buyback activity of $1 billion to $1.3 billion per year in 2012. We believe the company is taking the steps in improving the product at the Gap division and investing in new supportive marketing; however, it remains to be seen how customers will respond to the new spring flows. At the Old Navy division, we are more concerned about price competition and the ability to drive traffic and conversion. We also point out that the increased “better” and “best” price points that were layered in during the fall season did not drive average unit retail as expected. While AUR has been up at all divisions during the fall season, AUC is up significantly more and we expect ongoing margin pressure (although of less magnitude) moving into the spring 2012 season. We currently remain at Neutral and note that valuation and buybacks are likely to keep the stock at current levels, but we expect rangebound trading until product progress is more evident."
JMS raises FY12 EPS estimate from $1.71 to $1.81 and FY13 from $1.82 to $2.02.
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.
JMS analyst says, "We expect ongoing negative comps and gross margin pressure in 1H12, but believe ongoing buyback activity will likely support EPS. Management indicated that it would resume “normalized” buyback activity of $1 billion to $1.3 billion per year in 2012. We believe the company is taking the steps in improving the product at the Gap division and investing in new supportive marketing; however, it remains to be seen how customers will respond to the new spring flows. At the Old Navy division, we are more concerned about price competition and the ability to drive traffic and conversion. We also point out that the increased “better” and “best” price points that were layered in during the fall season did not drive average unit retail as expected. While AUR has been up at all divisions during the fall season, AUC is up significantly more and we expect ongoing margin pressure (although of less magnitude) moving into the spring 2012 season. We currently remain at Neutral and note that valuation and buybacks are likely to keep the stock at current levels, but we expect rangebound trading until product progress is more evident."
JMS raises FY12 EPS estimate from $1.71 to $1.81 and FY13 from $1.82 to $2.02.
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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