Gap (GPS.US) shares surged more than 7% following an upgrade from JP Morgan (JPM.US) to an Overweight rating on what it sees as a favorable risk-reward profile into 2021 following a long period of underperformance. The investment firm also raised its price target on Gap to $30 a share from $22 and believes that the company's shares are worth buying ahead of its earnings report which will be released tommorow – especially because investors can get its flagship brand Gap essentially for free. "Looking forward, we see an embedded call option on Gap/Banana Republic with zero value attributed to the two brands today," analyst Matthew Boss said.
That's "despite a potential near-term catalyst path with the Kanye West 'YZY Gap' launch in fiscal 2021 as a brand accelerator for Gap and a rotation back to workwear in light of vaccine news, a catalyst at Banana Republic, consistent with our 3-wave retail 'recovery.'" said Boss. He also believes that the company's Old Navy brand will benefit from lateral retail closures and disruption post-pandemic.
JP Morgan also raised its guidance for the apparel retailer's third-quarter earnings and now expects earnings of 40 cents a share, 9 cents per share ahead of the broad consensus. JP Morgan raised its third-quarter same-store-sales estimate to a negative 0.2% compared the analysts' expectations of -2.5%.
GAP(GPS.US) stock launched today’s session higher and broke above the upper limit of the upward channel. Currently price is approaching major resistance at $27.50. Should buyers manage to break above the aforementioned level, then upward move towards $31.25 may accelerate. However if sellers manage to halt advance there, the downward correction may start. The nearest support lies at $23.85. Source: xStation5
This content has been created by XTB S.A. This service is provided by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. XTB S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.
