Stifel Responds To Gap's September Numbers: 'Old Navy On Fire'

Stifel reiterated its Hold rating on the shares of Gap Inc (NYSE: GPS), as it anticipated continued challenges at its Gap and Banana divisions in the near term. Commenting on Old Navy's fall product as appealing and well assorted, the firm said results at Old Navy were encouraging.

Analyst Richard Jaffe said his confidence in the company is undermined by the prolonged outperformance at the Gap business, rendering the visibility for improvement limited. The analyst also expressed doubts regarding the ability of the aggressive cost cutting and business rationalization plan to help improve the appeal or long term success of the various Gap brands.

Related Link: 7 Retail Stocks In Focus After September Sales Data Released

Citing limited visibility for improvement in the fundamentals of the business, the firm reiterated its Neutral rating. The firm's $25 fair value price is based on 12 times its 2017 earnings per share estimate of $2.05.

At time of writing, shares of Gap were up 15.06 percent at $26.20.

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