MILWAUKEE – An analyst on Friday raised her estimates and price target for Gap Inc. on the retailer’s sales performance last month, primarily in its Old Navy segment.

UBS analyst Roxanne Meyer told clients in a note Friday that the company’s sales performance beat estimates as it improved on margins and saw growth in Old Navy.

The San Francisco-based retailer said Thursday that its August comparable-store sales fell 3 percent, not as much as the 7 percent drop analysts had anticipated. Old Navy sales at stores open at least a year rose 4 percent, below analyst expectations of 6.4 percent. But comparable sales at namesake chain Gap fell 7 percent, and pricier Banana Republic’s comparable sales fell 8 percent.

“The biggest positive surprise came from Old Navy despite the very difficult comparisons,” to last year, the analyst wrote.

She said sales of children’s items led performance, and the company would not specify how adult sales fared.

“But we wonder if the August lift will be short-lived once BTS (back-to-school) shopping is done,” Meyer said.

Meyer raised her estimates by a penny for earnings per share each in the third quarter to 35 cents and for fiscal 2009 to $1.36.

Thomson Reuters said analysts expect earnings per share of 33 cents in the third quarter, which ends in October. For fiscal 2009, analysts predict earnings per share of $1.33.

Meyer also raised her share price target to $21 from $18.

Shares of Gap fell 27 cents to $20.91 in midday trading Friday.