UPDATE: J.P. Morgan Reiterates Neutral Rating, Lowers PT on The Gap

In a report published Wednesday, J.P. Morgan & Co. reiterated its Neutral rating on The Gap GPS, but lowered its price target from $35.00 to $33.00. J.P. Morgan noted, “GPS shares fell 10% on Tuesday (S&P -.17%) following a management meeting hosted by an investment firm. Still, GPS shares remain among the best performing stocks in our specialty retail universe (up 67% YTD, S&P +10%), and with strength at Gap brand in November, assuming the company can fix the recent softness at Old Navy, the stock could be oversold here at the $30 level. However, expected margin gains from last year's sharp increase in cotton costs in Q4 could be more muted as Old Navy might need to clear through higher than expected units to end the quarter in a clean position. Making matters harder on the stock could be the fact that short interest has all but evaporated in the name---just 6.9mm shares today, compared to 25mm shares short a year ago.” The Gap closed on Tuesday at $30.94.