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Research Alert: CFRA Maintains Sell Opinion On Shares Of The Gap, Inc.
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Research Alert: CFRA Maintains Sell Opinion On Shares Of The Gap, Inc.
Mar 8, 2024 6:50 AM

09:25 AM EST, 03/08/2024 (MT Newswires) -- CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:

We raise our 12-month price target by $3 to $15, based on 12.5x our FY 25 (Jan.) EPS estimate and below GPS's 10-year average forward P/E multiple, reflecting the company's below-peer operating margin and top-line growth. We raise our FY 25 EPS estimate by $0.20 to $1.20 and initiate our FY 26 EPS estimate at $1.25. GPS posted normalized Q4 EPS of $0.49 vs. -$0.75, $0.24 above consensus estimates on revenues of $4.30B vs. $4.24B and $73M above estimates. By brand in Q4, Old Navy revenues increased 6% Y/Y, Gap declined 5%, Banana Republic declined 2%, and Athleta declined 4%. Q4 adjusted gross margin expanded 380 bps Y/Y to 38.8% due to lower freight costs and less promotional activity. Shares have doubled in less than six months, which we believe is unwarranted due to the company's below-peer operating metrics, lack of growth drivers, and inconsistent management performance. We see plenty of better options in apparel and see no real reason to invest in GPS in the long term.

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