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."
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Shares of Gap, Inc. closed at $17.28 yesterday.