Shares of clothing retailer Gap got a rating upgrade from analysts at J.P. Morgan.
J.P. Morgan analysts boosted their rating on the stock to overweight from neutral . They also hiked their price target on the shares to $30 a share from $22.
J.P. Morgan analyst Matthew Boss said, "Looking forward, we see an embedded call option on Gap/Banana Republic with zero value attributed to the two brands today," adding, "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.'"
According to Boss, Gap has underperformed the S&P 500 by 50% over the past three years, thereby supporting its upside potential.
J.P. Morgan increased its third-quarter same-store-sales estimate to -0.2%, vs. consensus estimate of -2.5%. J.P. Morgan estimates point to a third-quarter earnings of 40 cents per share vs. the consensus estimate of 31 cents.