Telsey Advisory Group analyst Dana Telsey reiterated the Market Perform rating on Gap, Inc. GPS, with an unchanged price target of $11.
GPS will report second quarter (ended July) earnings results after the market close on Thursday, August 24.
Telsey is particularly encouraged by inventory control (inventories were down double-digits for two consecutive quarters) and cost management ($150 million in annualized cost savings to be realized in 2H23).
The analyst expects 2Q23 EPS of $0.05 vs. $0.08 last year, and the consensus of $0.10.
On the top line, the analyst expects total sales to decrease 6.4% YoY to $3.61 billion, slightly above the consensus estimate of down 7.2% YoY to $3.58 billion.
Within the top line, the analyst forecasts a total GPS comp of (4.1%) vs. the consensus of (4.3%) and (10.0%) last year.
Telsey anticipates 150 bps of gross margin expansion to 37.5%, vs. the consensus of 37.8% (up 180 bps YoY). Company guidance called for the gross margin to expand YoY from last year’s 36.0% margin.
In addition, the analyst’s SG&A forecast stands at 36.3%, deleveraging 200 bps YoY.
Altogether, Telsey forecasts 50 bps of operating margin contraction YoY to 1.2%, as compared to last year’s 1.7% margin.
The analyst forecasts a two-year forward EPS of $0.86, which compares to the historical median NTM multiple of 12.5x and the recent multiple of 14.3x.
Price Action: GPS shares are trading higher by 2.02% to $10.35 on the last checked Friday.
Image and article originally from www.benzinga.com. Read the original article here.