UPDATE: Sterne Agee Raises PT on The Gap on Slowing Comps, Margin Concerns

In a report published Friday, Sterne Agee analyst Ike Boruchow reiterated an Underperform rating on The Gap GPS, and raised the price target from $29.00 to $32.00. In the report, Boruchow noted, “GPS comped down 1%, with Gap brand flat, Old Navy down 2%, and Banana Republic up 1%. Management noted strength in cold weather items such as woven tops, denim and outerwear, rather than shorts, t-shirts, and dresses. Thus, the decent March comps could have been driven by lower-margin clearance sales (we note higher level of promos at BR and ON), given elevated inventories to start the quarter. That said, we are raising our PT from $29 to $32 (12-13x FY13E EPS), but remain at Underperform due to slowing comps and margin concerns.” The Gap closed on Thursday at $37.90.
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