Gap (GPS) Stock Rebounds After Disappointing Quarter, Analysts See Growth

Gap (GPS) stock is bouncing back from yesterday’s losses after analysts said the company could see a turnaround following mixed financial results for the fiscal 2015 third quarter.
By Amanda Gomez ,

NEW YORK (TheStreet) -- Gap (GPS) - Get Report stock is advancing 6.28% to $26.67 on heavy trading volume on Friday, reversing after-hours losses from Thursday caused by mixed quarterly financial results, after analyst saw support for long term growth.

The apparel retailer could see a turnaround next spring, driven by new products by executive VP of product design and development Wendi Goldman and a boost in marketing efforts, Jefferies said in an analyst note this morning.

The firm maintained a "buy" rating on the stock, but lowered its price target to $42 from $50.

After the market close on Thursday, Gap reported earnings of 63 cents per share, in line with estimates, and revenue of $3.86 billion, missing estimates of $3.91 billion, for the quarter ended October 31.

The company also lowered its 2015 fiscal year earnings outlook to $2.38 to $2.42 per share, from the previous guidance of $2.75 to $2.80 per share.

"We see potential for this guidance to prove conservative, as management seeks to reset the bar following its first miss in recent history," analysts added. "The guidance assumes that the holiday season remains highly promotional."

So far today, 6.5 million shares of Gap have exchanged hands, compared with its average daily volume of 5.7 million shares.

Separately, TheStreet Ratings team rates GAP INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

We rate GAP INC (GPS) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and a generally disappointing performance in the stock itself.

You can view the full analysis from the report here: GPS

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Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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