Reviewing The Case For The Gap Inc. (GPS) Going Higher


    Dimensional Fund Advisors LP recently announced the acquisition of new stake in The Gap Inc. (NYSE:GPS). The institutional investor has increased its shareholding in the Consumer Cyclical company by 13.25% to 8.76 million shares with purchase of 1.02 million shares. This fresh investment now brings its stake to 2.35% valued currently at $117.08 million. In addition, AQR Capital Management LLC raised its holdings by 4.92 million to 6.44 million shares.

    With over 8.25 million The Gap Inc. (GPS) shares trading Monday and a closing price of $17.39 on the day, the dollar volume was approximately $143.46 million. The shares have shown a positive weekly performance of 12.19% and its price on 08/31/20 lost nearly -0.86%. Currently, there are 372.00M common shares owned by the public and among those 207.92M shares have been available to trade.

    An analysis of what Wall Street brokers have to say about the expected price targets for this stock gives us this picture: 24 analysts who have offered their price forecasts for GPS have a consensus price objective of $16.70. The analysts have set the share’s price value over the next 12 months at a high of $28.00 and a low of $6.00 should the stock experience a downside. Incidentally, analysts’ outlook for the The Gap Inc. stock is 3.10 for the next 12 months. The average price target is -56.53% below its last price level and a downside to the estimated low will see the stock lose -189.83% over that period. But an upside of 37.89% will see the stock hit the forecast high price target while mean target price for the stock is $17.00.

    Insiders at the company have transacted a total of 64 times over the past 12 months, according to data filed with the U.S. Securities and Exchange Commission (SEC). 41 of these insider trades were purchases, accounting for 11,154,867 shares. Insider sales of the common stock occurred on 23 occasions, with total insider shares sold totaling 171,401 shares.

    The top 3 mutual fund holders in The Gap Inc. are Dodge & Cox Funds – Stock Fund, Parnassus Endeavor Fund, and Vanguard Total Stock Market Index. Dodge & Cox Funds – Stock Fund owns 18.76 million shares of the company’s stock, all valued at over $250.79 million. Parnassus Endeavor Fund sold -0.5 million shares to see its total holdings shrink to 10.0 million shares valued at over $133.7 million and representing 2.68% of the shares outstanding. Vanguard Total Stock Market Index sold 5373.0 shares to bring its total holdings to over 8.01 million shares at a value of $107.06 million. Vanguard Total Stock Market Index now owns shares totaling to 2.14% of the shares outstanding.

    Shares of The Gap Inc. (NYSE: GPS) opened at $17.42, down -$0.12 from a prior closing price of $17.54. However, the script later closed the day at $17.39, down -0.86%. The company’s stock has a 5-day price change of 12.19% and 63.29% over the past three months. GPS shares are trading -1.64% year to date (YTD), with the 12-month market performance up to 10.13% higher. It has a 12-month low price of $5.26 and touched a high of $19.86 over the same period. Currently, 8.25 million shares have been traded, compared to an average intraday trading volume of 16.16 million shares. The stock is trading above its simple moving averages at the SMA20, SMA50, and SMA200, as the current price level is off by 15.28%, 29.82%, and 32.45% respectively.

    Institutional ownership of The Gap Inc. (NYSE: GPS) shares accounts for 60.10% of the company’s 372.00M shares outstanding. Mutual fund holders own 32.29%, while other institutional holders and individual stakeholders account for 87.33% and 27.02% respectively.

    It has a market capitalization of $6.44B and a beta (3y monthly) value of 1.63. The earnings-per-share (ttm) stands at -$2.71. Price movements for the stock have been influenced by the stock’s volatility, which stands at 4.90% over the week and 4.56% over the month.

    Analysts forecast that The Gap Inc. (GPS) will achieve an EPS of $0.25 for the current quarter, $0.31 for the next quarter and $1.12 for 2022. The lowest estimate earnings-per-share for the quarter is $0.01 while analysts give the company a high EPS estimate of $0.56. Comparatively, EPS for the current quarter was $0.53 a year ago. Earnings per share for the fiscal year are expected to decrease by -62.30%, and 141.50% over the next financial year. EPS should grow at an annualized rate of -12.90% over the next five years, compared to -18.90% over the past 5-year period.

    If you are looking to buy this stock, then you may note that the average analyst recommendation by 24 brokerage firm advisors rate The Gap Inc. (GPS) as a “Hold” at a consensus score of 3.10. Specifically, 3 Wall Street analysts polled rate the stock as a buy, while 16 of the 24 advise that investors “hold,” and 3 rated it as a “Sell.”

    Looking at the support for the GPS, a number of firms have released research notes about the stock. BofA Securities stated their Neutral rating for the stock in a research note on August 28, 2020, with the firm’s price target at $18. Telsey Advisory Group coverage for the The Gap Inc. (GPS) stock in a research note released on August 28, 2020 offered a Market Perform rating with a price target of $17. Citigroup was of a view on August 25, 2020 that the stock is Buy, while RBC Capital Mkts gave the stock Outperform rating on July 15, 2020, issuing a price target of $13- $18. Wells Fargo on their part issued Overweight rating on June 22, 2020.


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