Gap Inc, the Consumer Cyclical sector company, was revisited by a Wall Street analyst today. Analyst Paul Lejuez from Citi maintained a Hold rating on the stock and has a $22.00 price target.
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Paul Lejuez has given his Hold rating due to a combination of factors affecting Gap Inc. The company’s second-quarter earnings per share slightly exceeded expectations, primarily due to reduced selling, general, and administrative expenses, although comparable sales and gross margin were below consensus. Management has revised the fiscal year 2025 earnings guidance downward, reflecting a greater impact from tariffs than previously anticipated. However, the mitigation of tariff impacts in the second half of the year is better than expected, with management indicating a significant reduction in the first tranche of tariffs.
Despite these positive mitigation efforts, there are concerns about the use of pricing as a new mitigation strategy, which introduces uncertainty. While third-quarter comparable sales appear strong, ongoing margin pressures from tariffs are expected to limit earnings per share growth in the first half of fiscal year 2026. Consequently, the risk-reward balance remains cautious, leading to the maintenance of the target price and a Hold rating.
In another report released today, Bank of America Securities also reiterated a Hold rating on the stock with a $23.00 price target.