Jefferies Raises PT on The Gap (GAP), Keeps Hold Rating

On May 21, Jefferies raised the price target on The Gap, Inc. (NYSE:GAP) from $26 to $29, keeping its Hold rating on the stock.

Corey Tarlowe from Jefferies has lifted the price target on GAP ahead of its Q1 2025 earnings release on May 29. The analyst is optimistic about the company’s sales and believes that the firm’s updated pricing and discounts during the quarter suggest a more promotional environment.

The Gap, Inc. projects its net sales to be flat to up slightly during Q1 FY2025 compared to net sales of $3.4 billion in Q1 FY2024. While the gross margin is expected to expand slightly from 41.2% in Q1 FY2024. Tarlowe highlighted that the Q1 data through April 29 shows that discounts across the company’s apparel brands were up 1.3% year-over-year, while average selling prices were down 0.9%. This promotional strategy was explicit across the company’s Gap and Old Navy brands.

Tarlowe sees this promotional approach as an opportunity in the pressured retail sector, as he remains cautious regarding a handful of estimates and price targets among The Gap's peers.

The Gap, Inc. (NYSE:GAP) is a speciality apparel retailer in America. The company offers apparel, personal care products, and accessories for women, men, and children. Its prominent apparel brands include Old Navy, Gap, Athleta, and Banana Republic. The company operates through stores, online, third-party sellers, and franchise stores.

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