UPDATE: Bank Of America Downgrades The Gap Inc.

In note released Monday morning, Bank of America analyst Lorraine Hutchinson downgraded shares of The Gap Inc. GPS from Neutral to Underperform and lowered the price target from $45 to $42.

Hutchinson wrote, "We are downgrading Gap to Underperform as we expect the company to miss its full year guidance and current Street estimates. Second half results are dependent on a turnaround at the Gap brand and early signs are not good."

Looking to September, Hutchinson noted that it is unlikely the company's new product lines introduced this month will be able to sell at full price due to competition from August's clearance items.

Adding to this pressure, Hutchinson believes it is unlikely continued SG&A cost control will be able to save the day and is forecasting a miss in the third quarter (consensus $0.83 vs. Bank of America $0.75). Hutchinson is also below the consensus estimates for full-year 2015 EPS at $2.85 compared to consensus of $2.96 and guidance of $2.95 - 3.00.