Gap, Inc. (GPS) PT Lowered to $25 at Mizuho Securities Following January Sales Update

Mizuho Securities lowered its price target on Gap, Inc. (NYSE: GPS) to $25.00 (from $27.00) while maintaining a Neutral rating.

Analyst Betty Chen comments "Although investors may be encouraged by the raised 4Q outlook, we note it is due to a lower tax rate and not from fundamental improvements in the business as January posted another sales shortfall. While January was a clearance month and not necessarily indicative of lasting trends, all brands saw sequential comp deceleration (largest variance at ON). Looking toward FY17, it is unclear how management plans to juggle product improvements, reduce discounting, and regain shoppers; especially at Gap and BR. Thus, while we increased our estimates to reflect the 4Q tax benefit, we are lowering our PT to $25 to reflect a below peer group multiple of 12x (from 13x previously) given topline challenges."

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