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Investing

An Unusual Gap Analyst Upgrade Ahead of Earnings (GPS)

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By Jon C. Ogg Published
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Gap Inc. (NYSE: GPS) is a long-time turnaround stock which is back over $20 now but has really not materialized.  So, what happens on a Citigroup analyst upgrade?  Shares are up over 2% and the note from Citi is expecting above-consensus earnings growth this year.  The firm is raising the rating to BUY and it is raising the price target objective to $26.00 per share from a prior target of $24.00.

Be advised that this is ahead of next week’s earnings report from Gap.  Citi also expects that Gap will give its first outlook for the coming year at the earnings report and expects that the current earnings could be 10% above estimates.  Other issues are ample cash to support strong share buybacks, a change in the company’s sourcing strategy, and also lean inventories.

After the company finishes using its cash for buybacks, perhaps a break-up of the organization could further unlock value.  Of course there is one problem in a break-up: someone would have to get stuck with Old Navy.

Gap stock is up 2.3% at $22.22 against a 52-week range of $15.08 to $23.73.

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About the Author Jon C. Ogg →

Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. a673b.bigscoots-temp.com.

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