What Analysts Think of Gap Stock Ahead of Earnings

As Gap Inc. (GAP) prepares to report its third-quarter earnings after the closing bell on Thursday, analysts have been weighing in on the retailer's prospects. The majority of analysts tracked by Visible Alpha have a buy rating for the company's stock, reflecting a bullish outlook on the clothing retailer.

Last quarter, Gap beat expectations and raised guidance based on higher sales at its Gap and Old Navy stores. Analysts are looking for modest revenue growth and a drop in earnings per share (EPS) in the upcoming earnings report. Despite the slight decrease in EPS, analysts remain optimistic about the company's performance.

Of the eight brokers polled by Visible Alpha, five have a buy or equivalent rating for the company's stock, compared to two hold ratings and one sell rating. The consensus price target is $27, which is a more than 25% premium to Monday's closing price. This positive sentiment is supported by Gap's recent performance, including a 5% year-to-date stock increase and a 1% revenue growth in the second quarter.



Analysts' forecasts for Gap's key metrics, such as revenue and EPS, have changed over the past 30 days, indicating a more optimistic outlook. The consensus estimate for EPS has increased by 0.5% to $0.56, pointing to a year-over-year decline of 5.1%. Revenue estimates have also risen by 0.9% to $3.8 billion, reflecting a 0.9% increase compared to the year-ago quarter.

Analysts are focusing on specific segments within Gap, such as Old Navy and Gap, for the upcoming earnings report. Old Navy is expected to drive revenue growth, with a projected increase of 1.6% year-over-year to $2.16 billion. Gap is predicted to see a modest increase of 0.3% to $889.48 million. Banana Republic is expected to decline by 0.9% to $455.92 million.



Analysts' price targets for Gap stock reflect their expectations for the company's earnings performance. The average price target of $27 indicates a 26.4% increase from the current stock price. This suggests that analysts anticipate a positive earnings outlook for Gap.

In conclusion, analysts have a predominantly bullish outlook on Gap stock ahead of its earnings report. The company's recent performance, including revenue growth and a positive earnings outlook, has contributed to this positive sentiment. As Gap continues to focus on its brand turnaround efforts, investors will be watching closely to see if the company can maintain its momentum and deliver strong earnings results.