UPDATE: BMO Capital Markets Downgrades The Gap to Market Perform, Lowers PT on Growing Concerns

In a report published Tuesday, BMO Capital Markets analyst John D. Morris downgraded the rating on

from Outperform to Market Perform, and lowered the price target from $50.00 to $35.00. In the report, BMO Capital Markets noted, “We are lowering our rating on Gap to Market Perform from Outperform. We have growing concerns that sector-wide 3Q weakness may extend into 4Q, given soft consumer demand, elevated inventory, and an increasingly promotional environment, based on our field research. We see many factors as driving this weakness, including the lack of a clear fashion consensus and an anemic macro backdrop. Please see our Apparel Retail sector report, dated 10/21/13, for details. We do not believe Gap has been immune to this broader slowdown. Further, with Gap's design team in transition, mixed reviews on Fall and Holiday product from our channel checks, and enhanced marketing efforts, we believe struggling to drive higher traffic, we see risk to margins. The SRI has shown a step-up in promotions at the core Gap brand.” The Gap closed on Monday at $36.93.