MKM Partners analyst Roxanne Meyer raised the price target on Gap, Inc. (NYSE: GPS) to $33.00 (from $30.00) while maintaining a Neutral rating.

The analyst comments "We view the spinoff of Old Navy, GPS' largest and most profitable division, as a positive strategic development to unlock value for shareholders and to allow Old Navy to garner the premium multiple it deserves relative to GPS. We aren't yet convinced that this is the right move from a corporate standpoint, or that Old Navy will be better served as a separate entity. There are also questions around the extent of dis-synergies and the impact on sales. However, we believe Old Navy on its own will garner a sizable premium vs. NewCo, with fundamentals that are coveted across the retail landscape. If this were to happen today, Old Navy could be worth as much as GPS was yesterday (or more). While not happening today, we think Athleta could be (and should be) next. In our view, there is more strategic rationale to spin out Athleta than Old Navy, but perhaps the timing isn't quite right."