UPDATE: Canaccord Upgrades Gap Due To Supply Chain Initiatives, New Online Services

In a note released early Wednesday morning, Canaccord analyst Laura Champine upgraded shares of The Gap (NYSE: GPS) from Hold to Buy and raised the price target from $47 to $51.

Champine explained that the upgrade is due primarily to supply-chain initiatives and new online services.

In terms of the supply-chain initiatives, Champine expects the company to be able to reduce costs, shorten lead times, provide a more consistently trendy assortment and drive long-term margin expansion.

Looking to the new online services, Champine believes it will improve traffic and conversion rates online as well as in stores.

Driven by expected long-term margin expansion, Champine is raising her long-term EPS estimates by an average of $0.17 per year.

Following the upgrade, shares of Gap are trading up just under one percent in the pre-market session.