Gap Inc: Strong Buy Rating Amid Growth Potential and Strategic Resilience

Analyst Paul Lejuez of Citi maintained a Buy rating on Gap Inc (GAP – Research Report), reducing the price target to $30.00.

Paul Lejuez has given his Buy rating due to a combination of factors that highlight Gap Inc’s potential for growth despite some challenges. The company’s first-quarter earnings per share exceeded expectations, driven by stronger sales and effective cost management. Although the Gap brand’s performance was slightly below market expectations, Old Navy’s results were stronger, which is significant given its larger contribution to the company’s overall sales and profitability.
Management has maintained its full-year guidance, even considering the anticipated tariff impacts, which suggests confidence in their ability to navigate these challenges. The company’s execution in maintaining consistent sales growth and cost discipline, along with a promising start to the second quarter, supports the attractive risk/reward profile. While there are some near-term concerns, particularly related to tariffs and the Gap brand’s performance, the overall outlook remains positive, justifying the Buy rating.

In another report released today, Morgan Stanley also maintained a Buy rating on the stock with a $27.00 price target.