Update: Jefferies Lowering Price Target On Gap

Jefferies & Co. is lowering the price target on shares of The Gap, Inc.

to $18, and is reiterating its Hold rating on shares after the company reported earnings. In a note to clients, Jefferies writes, "GPS reported 1Q EPS of 40c, slightly above JEF/Cons 38c/39c. However, the key issue here is the 2H outlook, which is significantly worse than expected due to a sharp rise in sourcing costs. With weak sales trends, ongoing mgmt/strategy changes and inconsistent consumer behavior, we do not expect GPS to overcome the sourcing headwinds in 2H easily. Remain cautious and reiterate Hold rating. Lowering PT to $18." Shares of GPS are down $3.74 in pre-market trading to $19.55, a loss of 16.06%.