UPDATE: Piper Jaffray Reiterates Overweight Rating, Raises PT on The Gap

In a report published Friday, Piper Jaffray & Co. reiterated its Overweight rating on The Gap GPS, and slightly raised its price target from $41.00 to $42.00. Piper Jaffray noted, “We are maintaining our Overweight rating on GPS shares following the company's September comp sales results which exceeded our and Street expectations. Strength across multiple operating divisions was evident in the month's results. Comparisons in October & FQ4 remain favorable, cotton cost abatement should buoy margins, and ongoing demand in colored bottoms plays to Gap's style strength. We are raising our estimates on comp sales and slightly better cost leverage. We are mindful, however, that the valuation multiple will likely contract over time as anticipated upside to earnings is realized. As such, we are adjusting our multiple from 18x to 17x and our price target increases to $42 from $41/share.” The Gap closed on Thursday at $37.10.