The Gap, Inc. (GPS) Analysts’ Calls on GPS Stock Conflict

Analysts at Goldman, assumed coverage of The Gap, Inc. (NYSE:GPS) with Neutral recommendation, according to their opinion released on October 26. Standpoint Research analysts bumped their recommendation on GPS stock from Hold to Buy in a separate flash note to investors on October 19. Analysts at JP Morgan downgraded the stock to a Underweight call from its previous Neutral stance, in a research note that dated back to October 18.

By watching the trading activity of corporate insiders, it will become easier to get a sense of The Gap, Inc. (NYSE:GPS)’s prospects. The earliest insider trade took place on 06/19/2018. Fisher William Sydney parted with a total of 1 million shares of company at average share price of $32.37. The total for the sales was set at $32.37 million. After this transaction, the Director, 10% Owner account balance stood at 37.91 million shares. The stock lost -21.41 percent since that insider sale. On 04/04/2018, Fisher Robert J, Director, 10% Owner, sold 500 thousand shares at a price per share of $31.28. This removed 15.64 million shares from the insider’s fortune and the stock saw a -18.67 percent retreat in value since the news became public. This transaction left 37.88 million shares in the Director, 10% Owner account. On 04/03/2018, VP & Chief Accounting Officer Bazzano Dara performed a sale transaction worth $15.76 thousand. This sale at $31.02 each has eliminated 0.51 thousand shares from the insider’s portfolio position. Meanwhile, shares have recorded -17.99 percent decrease since the transaction was reported. The insider now is left with 0 thousand shares remaining in the account. Fisher William Sydney, who performs the Director, 10% Owner job, sold 500 thousand shares for $16.05 million. The disposal occurred on 03/22/2018 was priced at $32.1 per share. The share price plunged -20.75 percent since the reporting date. Fisher William Sydney now left with a stake of 38.92 million GPS stock worth $990.18 million after the insider selling.

The Gap, Inc. (GPS) is expected to jump by 24.49 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $50-month high price target. This represents a whopping 96.54 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $31, which represents a return potential of 21.86 percent when compared to the closing price of the stock of $25.44 on Monday, November 19. The lowest price target for the stock is $24 — slightly more than -5.66 percent from GPS’s current share price.

The shares are currently floating around the first support level of $25.13. Below this, the next support is placed in the zone of $24.83. Till the time, the GPS stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 34.94 on daily chart, which may remain a cause for comfort. If the price breaks below $24.83 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $25.98 mark may result into a pull-back move towards $26.53 level.

GPS shares dropped -0.46 points or -1.78 percent on Monday to $25.44 with a heavy trade volume of 5.631 million shares. After opening the session at $25.86, the shares went as high as $26.22 and as low as $25.37, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $9.79 billion and now has 384.71 million shares outstanding. The Gap, Inc. (GPS) stock has gained 0.63 percent of market value in 21 trading days.

GPS stock has a trailing 3-year beta of 0.67, offering the possibility of a lower rate of return, but also posing less risk. The portion of a company’s profit allocated to each outstanding share of common stock was $2.37 a share in the trailing twelve months. The stock’s value has fallen -25.31 percent year to date (YTD) against a decline of -13.47 percent in 12 month’s time. The company’s shares still trade -28.7 percent away from its 1-year high of $35.68 and 0.67 percent up from 52-week low of $25.27. The average consensus rating on the company is 3, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a hold.

Shares of The Gap, Inc. (GPS) are trading at a P/E ratio of 11.42 times earnings reported for the past 12 months. The industry GPS operates in has an average P/E of 32.24. Its P/E ratio went as low as 11.1X and as high as 14.41 over the 5-year span. Further, it is sporting a 0.59 on the Price-to-Sales ratio. Compare this with the industry average P/S of 2.11. 38.4 percent is the gross profit margin for The Gap, Inc. and operating margin sits at 8.5 percent. Along with this, the net profit margin is 5.4 percent.

GPS will be showing off its Q3 earnings on November 20. Analysts are forecasting revenue to climb 4.3 percent to $4B in the next fiscal quarter, while earnings are seen soaring by nearly 17.24 percent to $0.68 per share. History has shown that shares in The Gap, Inc. have gone up on 17 different earnings reaction days and are predicted to add 0.04 percent when the company reports upcoming earnings. In last reported earnings results, it earned $0.76 per share, better than the $0.72, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $4.09B, better than the $4.01B analysts expected. Earnings are estimated to increase by 31.8 percent this year, 4.67 percent next year and continue to increase by 12.09 percent annually for the next 5 years.