Citigroup upgraded Gap Inc. from Hold to Buy on Friday as it is encouraged by solid top-line performance at Old Navy and Banana Republic.
While acknowledging that the Gap division is still a work in progress, analyst Kimberly Greenberger feels the franchise as a whole offers attractive margin and free cash flow characteristics.
She noted that Gap shares are down 7% so far in 2010, which presents an attractive buying opportunity.
The analyst’s price target on Gap shares climbs from US$23 to US$24.