Discussion in 'Stocks' started by dealmaker, Mar 3, 2018.

  1. dealmaker


    The Hot Stock: Gap Jumps 7.8%
    Teresa Rivas
    March 2, 2018 4:28 p.m. ET

    Gap (GPS) shot to the top of the S&P 500 on Friday, helped by itsstrong fourth quarter earnings.

    Gap climbed $2.48, or 7.8%, to $34.18. The S&P 500 rose 13.58 points, or 0.51%, to 2691.25.

    The clothing retailer said it earned 61 cents a share on revenue of $4.78 billion, while analysts were looking for earnings of 59 cents a share on revenue of $4.68 billion. Comparable sales at its flagship Gap stores were flat year-over-year, but Banana Republic comps were up 1% and surged 9% at Old Navy.

    For the full year, it sees earnings per share of $2.55-$2.70, above the $2.34 consensus.

    Jefferies' Randal Konikand his team reiterated a Buy rating on Gap today and boosted the price target $3 to $48. Konik hangs most of his bullish thesis on Old Navy, which he sees as well-positioned, given its sweet spot that overlaps fast fashion and value. Old Navy's fleet of stores could account for more than three-quarters of Gap's business in two years, Konik suggests. Moreover, he argues that strategic moves are enhancing Gap's long-term value, demonstrating that a "sustainable recovery" is underway--so much so that he thinks the stock can rise 50%.

    Another retailer, Foot Locker (FL) wasthe worst performer in the S&P 500 today.

    Gap is up 0.4% year to date and 36% in the past year.