Deutsche Bank Upgrades Gap, Inc. (GPS) at Buy; 'Making a Comeback With Improving Profitability'

July 26, 2021 6:22 AM EDT
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Price: $8.24 --0%

Rating Summary:
    9 Buy, 23 Hold, 7 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 3 | Down: 10 | New: 8
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(Updated - July 26, 2021 7:22 AM EDT)

Deutsche Bank analyst Gabriella Carbone upgrades Gap, Inc. (NYSE: GPS) from Hold to Buy and raises the price target to $42 (from $38).

The analyst commented, "Since our transfer of coverage on 6/18, we have taken a fresh look at GPS and are upgrading the stock to Buy from Hold as we believe volatile trends are now largely behind the company and see a path to consistent EBIT margin gains, largely driven by a reduction in fixed costs (e.g. store fleet restructuring; which we view as underappreciated), the mix shift to higher-margin and growth businesses (Old Navy and Athleta), improved profitability at the Gap brand with increasing consumer engagement, and demand generation investments driving market share gains. In our view, GPS is a very different company now than it was pre-pandemic given the removal of "trap" costs within the business, and we see the potential for the stock to move higher due to our assumption for ongoing EBIT dollar growth (modeling a 15% CAGR from 2019-2023)."

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 $29.14 yesterday.

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