Wedbush Cuts Price Target on Gap, Inc. (GPS) to $19 Following Weak April
Wedbush maintained a Neutral rating on Gap, Inc. (NYSE: GPS), and cut the price target to $19.00 (from $25.00), following weak April results. GPS reported April SSS of (7)%, well below consensus of +0.5%, driven by disappointing results across all three divisions. Management guided 1Q EPS in the range of $0.31- $0.32 compared to consensus of $0.44.
Analyst Morry Brown commented, "GPS remains in a tough spot with no clear positive catalyst in the near term. GPS saw deceleration across all three brands in April, extending softness already experienced QTD. 1Q EPS guidance was cut substantially, and we believe softness in the business is likely to carry through at least 3Q16. With a significant cut likely to be taken to consensus 2016 numbers, attention will turn to the 1Q conference call and the next directional trade in the stock is likely to hinge on (1) reaction to the details of the store closings and cost cuts and (2) the magnitude of the cut to the company’s prior FY forecast of $2.20-$2.25. We remain NEUTRAL on GPS, as we do not see a clear catalyst to shore up the business near term."
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Shares of Gap, Inc. closed at $21.81 yesterday.