Shares of Gap Inc. (NYSE:GPS) were moving lower on Monday, after a key analyst downgraded the company on growing concerns about extended retail shutdowns as the U.S. and Canada battle the coronavirus pandemic.
As of 12:30 p.m. EDT, Gap's shares were down about 4.7% from Friday's closing price.
In a note on Monday morning, Wells Fargo analyst Ike Boruchow cut his rating on Gap to underweight, from equal weight, and lowered his price target to $8 from $10.
Boruchow said that while the company is likely to be hit very hard in the near term by headwinds related to the COVID-19 [SARS-CoV-2] virus, he currently believes that the economic recession will be fairly short by historical standards. He thinks that Gap will be in position to make a strong recovery in 2021 once the economy gets rolling again.
Gap closed all of its retail stores in North America as of March 19. At the time, CEO Sonia Syngal said that she expected the closings to last two weeks, and that store employees would be paid through that period.
The company said last week that it's working with its suppliers to make personal protective equipment (PPE) for healthcare workers and first responders.
As longtime investors know, Gap is already something of a turnaround project. Syngal, who had been leading the company's Old Navy brand, was just promoted to the top job earlier this month, along with a brand-new senior-leadership team. She and her team have a tough road ahead, but with $1.7 billion in cash on hand as of quarter-end, Gap should be able to get through the pandemic without too much damage.