Morgan Stanley Analyst Thinks Gap's 'Fundamentals Remain Underwhelming'

Morgan Stanley Analyst Thinks Gap's 'Fundamentals Remain Underwhelming'
  • Morgan Stanley analyst Alex Straton reiterated an Underweight rating on the shares of Gap Inc GPS and raised the price target slightly to $8 from $7.50.
  • The analyst highlighted that Gap’s Q2 EPS came in slightly better-than-expected against lowered guidance, but fundamentals remain underwhelming.
  • Straton added that the company withdrew FY22 guidance, suggesting visibility at an all-time low and leaving the market to its own devices on potential outcomes.
  • She sees an opportunity for air freight and broader supply chain tailwinds in 2H22.
  • Falling store traffic, eCommerce disintermediation, declining brand health, apparel price deflation, and falling margins are Straton’s concerns for Gap’s growth going forward.
  • Price Action: GPS shares are trading lower by 1.55% at $9.85 on the last check Friday.
Posted In: BriefsAnalyst ColorNewsPrice TargetReiterationAnalyst RatingsGeneral