Bernstein Cuts Target On Gap To $28 Ahead Of Q3 Results

• Gap Inc GPS shares have declined 41.01 percent year to date, hitting a low of $25.38 on November 16.
• Bernstein’s Anne-Charlotte Windal has maintained a Market Perform rating on the company, while lowering the price target from $30 to $28.
• Windal expressed concern regarding any near term catalysts going forward, while mentioning that the company was expected to reduce its full year EPS guidance significantly.

Analyst Anne-Charlotte Windal stated that given the pre-announcement, Gap’s 3Q15 results are unlikely to come as a surprise when they are announced on November 19.

The company had pre-announced disappointing sales for October, with a 15 percent decline in comp for Banana Republic, along with comp deceleration for the Gap and Old Navy brands as well.

“Only bright note from the October sales release is tight inventory control, which we expect came at the expense of gross margin,” Windal said.

The persisting sales weakness at Banana Republic and Gap, along with the slowdown at Old Navy, have led to a sell-off in the shares, with the stock down 31 percent since the beginning of August.

According to the Bernstein report, “With the quarter pre-announced, focus will be on the company's top-line trajectory going into what is expected to be a challenging Holiday quarter, and the expected adjustments to FY guidance.”