UPDATE: Stifel Nicolaus Raises Gap's PT

According to Stifel Nicolaus, it has maintained its Buy rating on Gap

while raising the target price from $36 to $40. In the report, Stifel Nicolaus writes, "Although not yet firing on all cylinders, Gap's 2Q results made clear that this is a business very much on its way back to historical levels of profitability. Performance was strong across all divisions, with higher AURs and conversion rates evident in the 4% total company comp. Women's was notably strong across all brands. Compelling product and great retail execution has been the key. However, customer traffic was negative, which we anticipate will be addressed with an increased investment in marketing in 2H. In addition, management has a near-term tailwind as product costs decline year-over-year for the next three quarters, providing a possible lift to merchandise margins." Gap traded around $35 Friday.