NEW YORK (AP) -- A Sterne, Agee & Lynch analyst is raising his rating and price target for Gap, partly due to its strong holiday performance and efforts to increase its online business.
Analyst Ike Boruchow boosted Gap Inc. to "Buy" from "Underperform" and lifted its price target to $44 from $38. In a client, note the analyst said that the company — which runs Old Navy, Banana Republic, its namesake stores and others — was one of only three retailers to beat their holiday plan.
Gap previously reported a 1 percent increase in sales at stores open at least a year for the November and December holiday period compared with a year ago. This figure is a closely watched gauge of a retailer's health. It excludes results from stores recently opened or closed.
The analyst also said that demand and inventory seem to be aligned well, which is good news for the new year.
Boruchow said that Gap has been proactive with its online business, investing to make it better. The analyst said the company has added such online shopping features as ship-from-store, find-in-store and reserve-in-store.
"Over time these initiatives should improve conversion rates, traffic and profitability," he wrote.
Gap shares finished at $37.30 on Friday. Its shares are up almost 14 percent over the past year.
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