GAP expects modest Q1 growth, margin expansions and brand momentum, with cost controls helping offset macro and tariff headwinds in the upcoming report.
Looking beyond Wall Street's top -and-bottom-line estimate forecasts for Gap (GAP), delve into some of its key metrics to gain a deeper insight into the company's potential performance for the quarter ended April 2025.
Gap (GAP) possesses the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.
Gap Inc (NYSE:GPS)'s upcoming first quarter earnings report is expected to be a positive catalyst for its stock, according to analysts at UBS who have raised their price target on the clothing retailer. UBS boosted its price target to $29 from $19 on ‘Neutral'-rated Gap on an improved gross margin outlook, which reflects the latest US tariff policy and increased confidence in the company's long-term growth prospects.
In the ever-evolving landscape of fashion retail, two names have consistently shaped trends and defined generations: The Gap Inc. GAP and Urban Outfitters Inc. URBN. GAP is a legacy brand synonymous with classic Americana and wardrobe essentials, while URBN is a trend-driven disruptor catering to the eclectic, style-conscious youth.
The Gap, Inc. has continued to show turnaround progress. The Old Navy and Gap brands are showing increased relevance, and Gap's cost focus is expanding margins significantly. The upcoming Q1 report should show similar underlying trends. On the other hand, consumer weakness amid tariff uncertainty pressures the industry outlook. Based on turnaround progress, GAP stock remains undervalued. I estimate 42% upside to $36.1.
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The Gap's transition to a franchise model has improved margins and cash flows, despite revenue fluctuations and store count changes. Management's restructuring efforts, including workforce reduction and asset sales, have significantly boosted profitability and eliminated net debt. The company's shares are attractively priced compared to similar enterprises, making it a compelling buy despite potential tariff concerns.
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