AP News

Ahead of the Bell: Gap


NEW YORK (AP) — Gap's $130 million acquisition of women's clothing boutique Intermix is a good move that will give the company more insight into fashion trends, an analyst said Friday.

Gap Inc. announced the deal for Intermix, which runs 32 stores in the U.S. and Canada and a website, on Thursday.

Its shares rose 41 cents, or 1.3 percent, to $32.50 in premarket trading Friday.

In a client note, Richard Jaffe of Stifel Nicolaus said that the buyout will give Gap access to high-end fashion brands as well as its merchandising team.

Jaffe says that the transaction will help both companies. For Intermix, it provides the financial backing and infrastructure to support and grow the business. At Gap, the San Francisco company will gain from Intermix's fashion know-how and rapid growth potential.

Jaffe maintained a "Buy" rating and $40 price target.

Jefferies analyst Randal Konik also likes the Intermix deal, calling the company a "fashion leader." The analyst said that Intermix's relationships with top designers like Herve Leger and Yves Saint Laurent can help Gap and its existing brands.

Konik said that Gap is still one of his top picks, and he reaffirmed a "Buy" rating and $50 price target.


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