Gap gets downgrade, Bank of America cites Old Navy concerns
Bank of America (BofA) has once again dropped its rating of Gap Inc., taking it from Neutral to Underperform.
The firm has expressed apprehensions over the ongoing impact of supply chain challenges on the retail group’s near-term results, as well as citing concern with Old Navy, which it has said accounts for 55 percent of Gap’s sales.
“We expect Old Navy to be disproportionately hurt by its exposure to the low-income consumer and by worsening supply chain challenges,” said BofA analyst, Lorraine Hutchinson, in an assessment.
BofA has now cut its FY22 estimates on Gap, slashing its price objective from 26 dollars to 14 dollars. It added the negatives will offset strength with the Athleta brand.
Following the rating scrape, shares of Gap fell by 1.82 percent, according to Seeking Alpha
The group took a hit earlier in the month when Barclays also lowered its rating for the company, suggesting its heightened promotional activity could hint at a potential for slowing demand and an increase in inventory levels.