Bank of America Merrill Lynch Maintains Neutral On Gap

Bank of America Merrill Lynch has a Neutral rating and a $23 price target on shares of The Gap

after the company reported earnings. In a note to clients, Bank of America writes, "Gap reported 1Q EPS of $0.40, a penny ahead of recent guidance and our estimate, but the company cut F2011 guidance to $1.40-1.50 from previous guidance of $1.88-1.93 as Holiday product costs came in higher than expected. Gap now sees product costs for Holiday up 20%. We are cutting our F2011 EPS estimate by $0.32 to $1.43 to reflect these higher costs. We continue to view Gap's robust cash flow, and international and e-commerce growth favorably, but these positives are overshadowed by domestic weakness. We remain Neutral." Shares of GPS are down $3.95 in pre-market trading to $19.34, a loss of 16.96%.