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Gap Gets Price Target Boost From Wells Fargo

Wells Fargo sees a 'bull case building' for Gap after meeting with management.

Gap  (GPS) - Get Gap, Inc. (GPS) Report was rising Monday after a Wells Fargo analyst boosted his price target on shares of the clothing retailer to $40 a share from $32 after meeting with management.

Shares of Gap were up 6.9% to $32.95 in trading Monday.

Analyst Ike Boruchow, who kept his overweight rating on the stock, said in a note to investors that he came away from the meeting feeling more confident in Gap's go-forward prospects. 

The analyst said Old Navy appears to be extremely well-positioned for market share gains this year, Athleta has meaningful runway for continued growth and Gap brand is showing greenshoots in its brand-health initiatives.

"A lot to like, see bull case building from here, stay long," Boruchow said. "With a solid 4Q print now behind us, we believe the bull case can continue to build from here."

The analyst said that he continues to see an undervalued portfolio - led by Old Navy and Athleta "with a call option on the Gap brand (First positive comp in US in 4Q since 2017, Yeezy launch upcoming) potentially adding gravy to thesis."

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The Yeezy clothing line at Gap, created in partnership with musician and designer Kanye West, is expected by June 30.

Earlier this month, Gap missed fourth-quarter revenue estimates as same-store sales fell sharply at its Gap and Banana Republic stores, but the retailer posted better-than-expected earnings.

The company said that Gap Brand’s global footprint "was meaningfully impacted by COVID-mandated store closures and restrictions in Canada, China, Europe and Japan."

"Importantly, North America comparable sales were positive," Gap said in a statement.

Following the earnings report, J.P. Morgan analyst Matthew Boss raised his price target to $32 from $30 and affirmed his overweight rating.

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