Gap Inc’s Strong Performance and Growth Potential: Buy Rating Reaffirmed by Alexandra Straton

Morgan Stanley analyst Alexandra Straton has maintained their bullish stance on GAP stock, giving a Buy rating today.

Alexandra Straton has given her Buy rating due to a combination of factors that highlight Gap Inc’s strong performance and growth potential. The company’s third-quarter earnings per share exceeded expectations, driven by better-than-anticipated sales and gross margins. This success was largely attributed to the robust performance of Gap, Old Navy, and Banana Republic, with Old Navy achieving its highest comparable sales since 2017, excluding the COVID period. This marks Gap’s seventh consecutive quarter of positive comparable sales and its eleventh earnings beat, reinforcing the effectiveness of its brand reinvigoration strategy.
Furthermore, Gap Inc raised its sales and earnings guidance for the fiscal year 2025, suggesting confidence in continued growth. Management’s commentary on current demand and the potential for operational leverage in selling, general, and administrative expenses also supports this outlook. Straton believes there is room for further earnings per share revisions in the coming years, along with potential for valuation re-rating. The increased price target reflects confidence in Gap’s medium-term operating forecast, with expectations of gross margin expansion and operating margin improvements, implying significant upside potential from current trading levels.

According to TipRanks, Straton is a 3-star analyst with an average return of 3.3% and a 52.94% success rate. Straton covers the Consumer Cyclical sector, focusing on stocks such as On Holding AG, Bath & Body Works, and Tapestry.

In another report released today, TR | OpenAI – 4o also reiterated a Buy rating on the stock with a $28.00 price target.