NEW YORK (TheStreet) -- The Gap (GPS) stock closed up 1.19% to $38.98 on Thursday after Cantor Fitzgerald increased its 2015 earnings estimates to $2.80 from $2.78 per share, and 2016 earnings estimates to $3.07 from $3.04.
The firm maintained its price target of $42 and a "neutral" rating on the stock.
Gap reiterated its focus on shortening its product cycle and developing a responsive supply chain, and the firm believes this will enable Gap to stay more on-trend and reduce the need for markdowns.
"We think initiatives such as fabric platforming, test and respond should increase flexibility, reduce costs, and shorten lead times," Cantor Fitzgerald analysts said.
Additionally, fiscal year 2016 appears to be the inflection point, as product is already purchased through the remainder of this year, Cantor Fitzgerald noted.
Gap is an apparel retail company that offers apparel, accessories, and personal care products under Gap, Banana Republic and Old Navy brands.
Separately, TheStreet Ratings team rates GAP INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate GAP INC (GPS) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. 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, reasonable valuation levels and expanding profit margins. We feel its strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The current debt-to-equity ratio, 0.47, is low and is below the industry average, implying that there has been successful management of debt levels.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Specialty Retail industry and the overall market, GAP INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- 41.84% is the gross profit margin for GAP INC which we consider to be strong. Regardless of GPS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 6.53% trails the industry average.
- GAP INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, GAP INC increased its bottom line by earning $2.88 versus $2.75 in the prior year. For the next year, the market is expecting a contraction of 3.6% in earnings ($2.78 versus $2.88).
- You can view the full analysis from the report here: GPS Ratings Report