UPDATE: Deutsche Bank Lowers PT on Gap to $18

Deutsche Bank is out with its report today on Gap GPS, lowering its PT from $19 to $18. In a note to clients, Deutsche Bank writes, "We believe that Gap Inc's FY11 EPS plan reduction to $1.40-$1.50 from $1.88-$1.93 is capitulation that the company can not currently produce product for which consumers will pay higher prices in a rising cost environment. To us, that is the main takeaway of 1Q's report, and what should be the first (and second and third) order of business for this mgmt. team. Maintain Sell, reduce PT to $18 on 12x our new FY12 EPS. Key risk: a quick, material turnaround of the core Gap brand." At the time of posting, shares of GPS were trading pre-market at $19.40, down 16.70% from Wednesday's close.