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Guy Adami: At $19 Gap is a Buy

Shares of Gap slipped more than 10% in extended trade after the company reported first-quarter earnings that were down 23 percent although its revenue fell only slightly.

Gap , which operates the Banana Republic and Old Navy brands as well as Gap, said Thursday that its expenses are rising faster than it anticipated, and it's now spending about 20 percent more to produce each item than it did a year ago.

Recent retail price increases have not kept pace, and the company dramatically lowered its full-year earnings forecast.

By the numbers, Gap said its net income was $233 million, or 40 cents per share, for the quarter that ended April 30. That compares with $302 million a year earlier, but it's slightly higher than analysts expected.

Its revenue fell 1 percent to $3.29 billion.

What's the trade?

Guy Adami thinks shorts will lean into this name on Friday. “Look for it to trade down to $19, but then I think it’s a buy,” he says.

Steve Grasso is worried about retail broadly. “The whole lower gas thing was overdone,” he says. “And historically summer is a weak period for this sector.”

Karen Finerman thinks it's mistake to look at retail as either all risk on or all risk off. She says some retailers such as Macy’s and Saks are executing well and remain attractive simply because of their valuations.





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Trader disclosure: On May 19, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Finerman and Finerman's firm own (AAPL); Finerman and Finerman's firm own (BP); Finerman and Finerman's Firm own (CMI); Finerman's Firm owns (IBM); Finerman owns (C); FInerman owns (JPM); Finerman's Firm owns (JPM) leaps and (JPM); Finerman's Firm owns (TGT); Finerman owns (UNG); Finerman's Firm is short (IWM), (MDY), (SPY); FInermans firm is long S&P Puts, Russell 2000 Puts; Adami owns (AGU); Adami owns (C); Adami owns (GS); Adami owns (MSFT); Adami owns (NUE); Adami owns (BTU); Grasso owns (AKS); Grasso owns (AMD); Grasso owns (ASTM); Grasso owns (BA); Grasso owns (BAC); Grasso owns (C); Grasso owns (D); Grasso owns (HOV); Grasos owns (JPM); Grasso owns (LIT); Grasso owns (LPX); Grasso owns (MHY); Grasso owns (NDAQ); Grasso owns (PFE); Grasso owns (PRST)

For Steve Grasso
Stuart Frankel & Co and it’s partners own (ABX)
Stuart Frankel & Co and it’s partners own (CSCO)
Stuart Frankel & Co and it’s partners own (CUBA)
Stuart Frankel & Co and it’s partners own (GERN)
Stuart Frankel & Co and it’s partners own (HPQ)
Stuart Frankel & Co and it’s partners own (HSPO)
Stuart Frankel & Co and it’s partners own (MSFT)
Stuart Frankel & Co and it’s partners own (MU)
Stuart Frankel & Co and it’s partners own (NEM)
Stuart Frankel & Co and it’s partners own (NYX)
Stuart Frankel & Co and it’s partners own (PFE)
Stuart Frankel & Co and it’s partners own (PRST)
Stuart Frankel & Co and it’s partners own (SDS)
Stuart Frankel & Co and it’s partners own (XRX)
Stuart Frankel & Co and it’s partners are Short (QQQQ)
Stuart Frankel & Co and it’s partners are short (AAPL)

For Brian Blair
*No Disclosures

For John Stephenson
John Stephenson and First Asset Management are long corn
John Stephenson and First Asset Management are long CF Industries
John Stephenson and First Asset Management are long Potash Corp
John Stephenson and First Asset Management are long Agrium
John Stephenson and First Asset Management are long Mosaic


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