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Janney Montgomery Scott Upgrades The Gap to “Buy”; Margins Improving (GPS)

By Dividend.com,  March 30, 2012, 08:32:03 AM EDT

Apparel maker The Gap Inc. ( GPS ) on Friday caught a big upgrade from analysts at Janney Montgomery Scott.

The firm said it boosted its rating on GPS from "Neutral" to "Buy" while lifting its price target from $29 to $33. That new target suggests a 26% upside to the stock's Thursday closing price of $26.10.

A Janney Montgomery Scott analyst commented, "We are upgrading shares of GPS to BUY from Neutral based on: 1) evidence of product improvement with trend-right color and fashion items, 2) the opportunity for improved inventory management in FY12, and 3) margin improvement in 2H12 with AUC reversal opportunity. Through our checks, we continue to note positive customer reception to Gap's spring flows, which are much improved and include bright colors and trend-right fashion. At Old Navy, product improvement is also evident at compelling price points with a depth of colors and floral patterns, while Banana Republic has also driven increased traffic with the re-launch of the Mad Men Collection."

The Gap shares rose 50 cents, or +1.9%, in premarket trading Friday.

The Bottom Line
Shares of The Gap ( GPS ) have a 1.92% dividend yield, based on last night's closing stock price of $26.10. The stock has technical support in the $22-$23 price area. If the shares can firm up, we see overhead resistance around the $30 price level.

The Gap Inc. ( GPS ) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.3 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.


This article appears in: Investing, Stocks

Referenced Stocks: GPS



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