Why Traders Are Keeping a Close Eye on Gap Inc (GPS)

Gap Inc (NYSE:GPS) is on many watch-lists today after analyst Matthew Boss of JPMorgan upped his rating on the retailer to ‘Neutral’ from ‘Underweight’. Boss also raised his target price to $24 from the previous $21 per share, citing fieldwork research that indicated more stable sales at the company’s Old Navy division. Given that Gap shares have lagged over the past year and a half, Boss feels that the stock’s valuation is no longer overpriced versus peers.

Shares of the fashion retailer had previously suffered due to slowing sales, but have been mostly range-bound in recent months. Gap Inc (NYSE:GPS) is up 9% year-to-date and yields around 3.8% at current prices. Today’s upgrade could potentially improve sentiment.

What Does The Smart Money Sentiment Say?

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Smart money sentiment in Gap was almost unchanged in Q4. According to our data of 742 top funds, 28 reported long positions of $290.41 million of Gap Inc (NYSE:GPS) and accounted for 3.20% of the float on December 31, versus 28 funds and $298.91 million on September 30. Some hedge funds do seem bearish, however. 13.25% of Gap’s float is short according to recent data.

The Bottom Line

Gap Inc (NYSE:GPS) is trending due to a Wall Street upgrade. For those of you interested, check out ‘Largest Online Retailers in the World‘.

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