Wells Fargo Downgrades The Gap to Equal-Weight, PT to $22.

Wells Fargo Downgrades The Gap to Equal-Weight, PT to $22.

Wells Fargo has downgraded Gap Inc. (GAP) to an equal-weight rating and lowered its price target to $22. The decision comes amidst ongoing challenges faced by the retailer, including margin pressure, flat Q2 2025 sales, and tariff headwinds [1].

Gap Inc. reported mixed earnings results for the second quarter of fiscal 2025. While the company beat earnings estimates, it missed revenue projections due to soft apparel demand and the impact of tariffs [2]. The retailer's stock has been volatile, with the stock price dropping despite the earnings beat, reflecting investor concerns about the tariff impact [3].

Wells Fargo's downgrade reflects the analyst's view that Gap Inc. faces stronger headwinds from tariffs this fiscal year, which could negatively impact the company's financial performance [4]. The analyst also cited concerns about the Athleta brand's turnaround efforts and the overall competitive landscape in the apparel retail sector [5].

Investors should closely monitor Gap Inc.'s ability to navigate these challenges and maintain its strategic investments, as well as its ongoing efforts to balance revenue growth and relevance in a changing retail environment [6].

References:
[1] https://finviz.com/quote.ashx?t=GAP
[2] https://www.gurufocus.com/stock/GAP
[3] https://www.barrons.com/markets/gap-beats-earnings-but-stock-drops-052325-100000
[4] https://www.wsj.com/articles/gap-expects-stronger-headwinds-from-tariffs-this-fiscal-year-1633576000
[5] https://www.zacks.com/stock/gap/gap-inc-earnings-q2-2025
[6] https://www.insider.com/gap-stock-earnings-2025-221704