May 17 (Bloomberg) -- Gap Inc., the largest U.S. specialty- apparel retailer, fell in New York after forecasting full-year earnings that trailed analysts’ estimates amid higher costs.

Profit this year will be as much as $1.83 per share, San Francisco-based Gap said today in a statement. The forecast, up from a previous projection of a maximum of $1.80 per share, trailed the $1.98 average of 27 analysts’ estimates compiled by Bloomberg.

Gap spent more on short-term investments including marketing and operating costs in the first quarter as it rolled out a popular spring collection that analysts have viewed as the start of a turnaround for the brand in North America. That helped drive a more than 40 percent gain in its stock this year before today, a rebound from 2011, when sales fell to a three- year low amid high cotton prices and missteps at Old Navy.

After this year’s rally “expectations may now be too high,” Jennifer Davis, an analyst at Lazard Capital Markets in New York, wrote in a note before the results were announced. “While we believe the assortments have improved, especially at Gap stores, we are not yet convinced that current trends are sustainable.”

Davis has a neutral rating on the shares, the equivalent of a hold recommendation.

Gap fell 2.9 percent to $25.56 at 4:10 p.m. in New York.

Even as the company had success with its colored denim, khakis and shorts, bottoms are less important in the summer and tops may be a work in progress, Davis wrote.

Net income for the first-quarter was $233 million, or 47 cents a share, compared with $233 million, or 40 cents, a year earlier, according to the statement.

--Editor: James Callan, Kevin Orland

To contact the reporter on this story: Sapna Maheshwari in New York at sapnam@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net