TD Cowen upgrades Gap with transformation in ‘early innings’

TD Cowen upgraded Gap to Buy from Hold with a price target of $30, up from $28. Gap is in the “early innings” of a transformation across all four of its brands and its growth potential is underappreciated, the analyst tells investors in a research note. The firm sees “encouraging signs” of transformation at the Gap brand, more sustained growth at Old Navy, and potential for Athleta to return to growth in the second half of 2024. TD sees Old Navy’s improving product assortment, particularly around the Back-to-School season, and collaborations at Gap as near-term catalysts for the stock. In addition, the recent improvement in comparable sales for Athleta “bodes well” the Gap’s second half of 2024, TD adds.