Shares of apparel retailer Gap GAP.N fell 1.2% to $20.7 in premarket trading.
Jefferies downgraded the stock to "hold" from "buy" and cut its price target to $23 from $29, representing a 9.7% upside to the stock's last close.
The brokerage said "the Gap brand turnaround is working, but Old Navy survey and promo trends are unfavorable".
Jefferies said increased discounting at Old Navy and continued pressure on average selling prices remain concerns, with these trends potentially lasting longer than expected.
Gap risks underperforming expectations if Old Navy fails to show meaningful improvement, especially amid a more challenging second-half environment, the brokerage added.
12 of 21 brokerages rate the stock "buy" or higher, 9 "hold"; their median price target is $26 - LSEG-compiled data.
As of the last day's close, the stock was down 18.1% year to date.
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