Gap Inc’s Mixed Performance: Balancing Strong Sales with Tariff Challenges

In a report released today, Lorraine Hutchinson from Bank of America Securities reiterated a Hold rating on Gap Inc (GAP – Research Report), with a price target of $25.00.

Lorraine Hutchinson’s rating is based on a combination of factors that reflect both positive and challenging aspects of Gap Inc’s current situation. The company reported better-than-expected sales and gross margins in the first quarter, which is encouraging, particularly with positive comparable sales from Old Navy and Gap. However, the ongoing tariff pressures, especially affecting lower-end concepts like Old Navy, present a significant concern.
Gap Inc is working to mitigate the tariff impact, which is estimated to be between $250-300 million, by adjusting sourcing and manufacturing strategies. Despite these efforts, the tariffs are expected to exert pressure on gross margins in the second half of the year. While management is focused on long-term growth and margin recovery, the immediate challenges posed by tariffs and the need for strategic investments have led to a cautious outlook, resulting in the Hold rating.

In another report released on May 23, Telsey Advisory also maintained a Hold rating on the stock with a $26.00 price target.

Based on the recent corporate insider activity of 80 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of GAP in relation to earlier this year.