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Here's Why Gap (GPS) Stock is Tanking Today

Madeleine Johnson
Updated

On Tuesday, shares of struggling retailer Gap, Inc. GPS are tumbling, down over 12% in midday trading after the company received price target cuts at multiple firms.

Deutsche Bank reduced its price target for Gap to $17 from $21, and maintained its ‘Sell’ rating on the stock. Analysts at RBC Capital also lowered the company’s price objective from $26 to $20 with a ‘Sector Perform’ rating, suggesting a potential downside of 8.30% from GPS’ previous close.

Nomura also cut its price target for Gap to $19 from $26, and maintained its ‘Neutral’ rating. "Gap businesses are simply too large in the new normal where physical distribution has become a liability and uniformity is no longer 'cool,'" Nomura analysts noted.

Jeffries slashed its price target on GPS to $28 from $34 while reconfirming a ‘Buy’ rating, and MKM Partners lowered its price target to $21 from $25.

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These price reductions come after Gap announced weak April earnings as well as forecasting lower-than-expecting 2016 Q1 results. Same-store sales were down 7% for the four weeks ended April 30, and comparable sales declined 5%. Revenue fell to $1.12 billion in April as well, down from the $1.21 billion reported in the year-ago period.

Gap expects to report Q1 fiscal 2016 earnings on May 19 in the range of $0.31-$0.32 per share, well below analysts’ expectations of $0.44 per share. First quarter expected revenue of $3.44 billion is also lower than the $3.54 billion analysts had originally forecasted.

Gap currently sits at a #3 (Hold) on the Zacks Rank.

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GAP INC (GPS): Free Stock Analysis Report
 
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