Goldman Sachs Resumes Coverage on The Gap as a “Buy” (GPS)

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Apparel retailer The Gap Inc. ( GPS ) on Tuesday received some bullish commentary from analysts at Goldman Sachs.

The firm reinstated coverage on GPS with a "Buy" rating and $41 price target, suggesting a nearly 33% upside to the stock's Monday closing price of $30.89.

A Goldman Sachs analyst commented, "GPS is a mature retailer with under-appreciated cyclical tailwinds, most significantly on the cost side as cotton deflation fuels 10-15% upside to the consensus earnings outlook." In addition to the boost from lower cotton prices, the firm also higher comps resulting from solid brand momentum and the ever-changing fashion cycle.

The Gap shares were mostly flat in premarket trading Tuesday.

The Bottom Line
Shares of The Gap ( GPS ) have a 1.62% dividend yield, based on last night's closing stock price of $30.89. The stock has technical support in the $27-$29 price area. If the shares can firm up, we see overhead resistance around the $33-$35 price levels.

The Gap Inc. ( GPS ) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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