NEW YORK (AP) -- A trio of analysts lifted their price targets for Gap on Friday, following the retailer's better-than-expected June results for revenue at stores open at least a year.
On Thursday Gap Inc. reported that the metric, a key gauge of a retailer's health, climbed 7 percent. This topped the 4.7 percent increase that analysts surveyed by Thomson Reuters expected.
Revenue at stores open at least a year excludes results from stores recently opened or closed. Analysts say that provides a clearer picture of a retail company's underlying performance.
Gap Inc. said that the figure rose five percent at Gap's global division and 13 percent at Old Navy's global business. But at its Banana Republic stores, revenue at stores open at least a year fell 1 percent.
Sterne, Agee & Leach's Ike Boruchow said in a client note that the performance was solid, given that the chain faced an easy year-ago comparison — a 1 percent increase. The analyst said Gap stores saw strong sales of denim, woven tops, dresses and shorts, while Old Navy did well because of promotions on items like flip-flops, dresses and activewear.
Boruchow boosted Gap's price target to $40 from $35 and maintained an "Underperform" rating. The analyst said he kept the "Underperform" rating in part because of tougher comparisons that are coming up, high inventory levels and concerns that Old Navy's recent strong performance may have been due to promotions.
Adrienne Tennant of Janney Capital Markets said that Old Navy may have a harder time in July as it's up against a 12 percent increase in same-store revenue for the prior-year period. The analyst also pointed out that the company shifted its Super Cash promotion to June this year, while it was in July last year. Still, Tennant says that Gap should benefit from continued product momentum at all three of its units. She reaffirmed a "Buy" rating and lifted its price target to $52 from $48.
Stifel Nicolaus' Richard Jaffe also increased Gap's price target, raising it to $48 from $45. He maintained a "Buy" rating.
Gap does not comment on analyst reports.
Its shares added 34 cents to $45.11 in afternoon trading. Shares touched a 13-year high of $45.37 earlier Friday. They're up 45 percent in 2013.
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