UPDATE: Goldman Sachs Downgrades The Gap on Expected Near-Term Demand Headwinds
In a report published Monday, Goldman Sachs analyst Lindsay Drucker Mann downgraded the rating on The Gap (NYSE: GPS) from Buy to Neutral, and lowered the price target from $42.00 to $40.00.
In the report, Goldman Sachs noted, “We downgrade GPS to Neutral from Buy as we expect near-term demand headwinds will hamper comp sales and gross margin. Recent data points have left us incrementally more concerned about the prospects for 3Q13 and holiday: (1) GPS September sales report exposed vulnerability to macro challenges, including traffic weakness and a need to step-up promotions; this is a change for GPS which YTD was insulated from macro weakness, (2) pricing points to a tough October for the Gap brand, and (3) we see little to improve the course of business between now and holiday. Since adding GPS to the Buy List on 12/11/12, the stock is +19.1% vs. the S&P 500 +24.2%.”
The Gap closed on Friday at $36.78.
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