Citi Lowers PT on Gap to $22 (GPS)

Citi lowered its price target on Gap GPS from $25 to $22. In a research report published today, Citi named lower earnings per share estimates for 2011 and 2012 as reasons for lowering its price target on Gap. In the report, Citi states, "We are lowering our 2011 EPS estimate for GPS to reflect prospects for continued comp and margin weakness at core Gap coupled with mixed traffic and higher product costs at Old Navy. We've moved to $1.75 for 2011 and $2.00 for 2012. Management guided to a below consensus 1Q11 following an April that came with “significant merchandise margin weakness;” we don't see a reversal in those trends near term and believe Gap product remains a margin risk well into the second half. The new team has not yet had a chance to impact product and holiday is largely committed. Our price target moves to $22, 11x our 2012 estimate, though shares could easily overshoot that." At the moment, Citi has a Hold rating on Gap. In today's trading, Gap added 0.04% to its value and is currently trading at $22.61.