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What Do Wall Street Analysts Think about Gap Stock?

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Consensus analyst recommendation

Of the 38 Wall Street analysts covering Gap (GPS) stock, 24 have given it a “hold” recommendation. The company’s average 12-month target price is $28.93. That means that if the consensus is correct, the stock has a potential to return 15.5% in the next 12 months.

As you can see in the above graph, while “hold” is the consensus, there are nine investment firms that have recommended a “sell” for the stock. These include JPMorgan, Barclays, and UBS.

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Valuation multiples

Gap (GPS) stock is trading at a current PE (price-to-earnings) multiple of 9.22x. It’s trading more cheaply than its peers when you compare it to the apparel retailer industry (XRT), which has an average PE of 16.0x.

TJX Companies (TJX), Ross Stores (ROST), and L Brands (LB) have been trading at 20.79x, 19.46x, and 25.09x, respectively. Gap’s forward PE multiple is 10.04x, which suggests that earnings could decline in the next 12 months.

Gap’s current PS (price-to-sales) multiple is 0.66x, which looks cheap when compared to the industry’s 1.33x. But sales have been lagging behind the industry growth. The industry’s forward PS multiple is 1.21x, while Gap (GPS) has a forward PS multiple of just 0.63x.

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