Janney Capital's Adrienne Tennant adjusted estimates and raised its price target on Buy-rated Gap, Inc. (NYSE: GPS) from $44 to $47 following results after the close.
The analyst noted Q13 EPS includes an approximate $0.12 positive impact from the calendar shift created by the 53rd week in fiscal year 2012 (about $0.08) and a benefit from the favorable resolution of tax positions in the quarter (about $0.04). The company reaffirmed guidance for FY13 EPS in the range of $2.52 to $2.60 versus the Street currently at $2.73, citing the worsening impact of the weakening Yen, as well as an almost full reversal of the 1Q13 calendar shift benefit in 4Q13.
Tennant said, "We believe the company chooses to remain conservative at this time given the volatile macro-backdrop and tough mall environment, we believe the several margin-driving initiatives and ongoing buyback activity makes this guidance highly achievable and beatable."
The firm is lowering FY13 EPS estimate and slightly raising our FY14 EPS estimate to reflect a weakening Yen, as well as the full reversal of the 1Q13 calendar benefit in 4Q13. FY13 EPS estimate goes to $2.67 from $2.70 (versus consensus of $2.73); and FY14 EPS estimate goes to $2.97 from $2.96 (versus consensus of $3.00).
"Overall, we continue to believe the company will benefit from ongoing inventory discipline, costdeflation in 1H13 (although diminishing), and product momentum at all three divisions." Tennant said. "We reiterate our Buy rating and continue to recommend accumulation of shares, as we expect ongoing outperformance of the stock throughout 2013, particularly during 2Q13 as we believe pent up demand will drive sales."