NEW YORK — Gap Inc. got an early Christmas gift: an upgrade from Gerard Klauer Mattison.

GKM analyst John Morris upgraded the San Francisco-based specialty retailer Monday to "buy" from "neutral" and raised his earnings-per-share estimates for the fourth quarter to 16 cents from 14 cents and for the full year to 42 cents from 40 cents.

Overall, according to First Call, analysts are expecting earnings of 12 cents versus a loss of 4 cents in the year-ago quarter.

Gap shares moved up 10 cents, or 0.6 percent, to close at $15.99 in New York Stock Exchange trading Monday.

"We think the merchandising at Gap adult shows marked signs of improvement into the heart of the holiday season," he wrote in research notes, adding he expects this to continue through the fourth quarter and into next year.

He also said he anticipates Gap to report better-than-expected same-store sales results for November, which would mark the second month of improved comparable-store sales.

In October, Gap ended 30 straight months of negative comps by reporting a positive 11 percent comp for the month versus negative 6 percent in October 2001.

"Until recently, the core of Gap’s troubles lay with inconsistent and misdirected merchandising and marketing that did not fit with the essence of the brand," Morris noted. "We now believe that an improvement in the quality and styling offered across all divisions is luring core customers back to the stores and that this is sustainable in the near future."

Todd Slater, an analyst at Lazard Frères, noted that the busiest two stores in the mall appeared to be the various Gap brands — Gap, Old Navy and Banana Republic — and Aeropostale. "Gap was converting more than its fair share of traffic due to more compelling product assortments backed up by effective [and understandable] TV and direct-mail marketing. The merchandise was especially compelling on the women’s side, with sweaters of all stripes [literally] flying off the shelves," he said in a note.

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