UBS Cuts Price Target on Gap, Inc. (GPS) Following In-Line 1Q

UBS maintained a Sell rating on Gap, Inc. (NYSE: GPS), and cut the price target to $16.00 (from $18.00), following the company's 1Q earnings report. GPS reported EPS of $0.32, in line with estimates.

Analyst Michael Binetti commented, "GPS reported an in line 1Q EPS of $0.32, but more important 1Q updates include: 1) removed FY16 EPS guidance given the lack of top line visibility, 2) an incremental store closure program (representing ~$250M of lost sales), 3) cost restructuring (~$275M of annualized savings), and 4) the first quarter without share repurchase since 2Q09. We are further reducing our FY16 estimate (which we had already significantly cut on 5/9) to $1.84 (from $2.00)—partly based on reduced confidence in a NT top line improvement given GPS's comment that current Consensus of $1.92 would require an acceleration from 1Q trends. Our FY16E EPS is based on -2.2% SSS decline. We're lowering FY17E EPS to $1.86 (+1% YOY) based partly on flat SSS YOY."

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 $17.28 yesterday.

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