GAP Stock Surged 18% Last Week: Wall Street Raises Price Targets, Eyes Old Navy Turnaround

Analysts raised their price targets as Gap’s performance improved and confidence in its earnings outlook grew.

• TD Cowen raised Gap’s price target to $27 and kept a Buy rating, while Morgan Stanley lifted its target to $23 and maintained Equal Weight. 
• Both cited better-than-feared Q2 results, though analysts want more proof of Old Navy’s expected recovery.
• Wells Fargo remains cautious on the near-term outlook and is watching for a sustained turnaround. 

Gap Inc. (GAP) stock clocked over a 18% gain last week, extending its recent momentum as Wall Street grew more upbeat following the retailer’s fiscal second-quarter (Q2) results. Analysts at TD Cowen, Morgan Stanley and Wells Fargo raised their price targets, citing better-than-feared performance and signs that Old Navy may be stabilizing. 

TD Cowen Sees Over 100% Upside For Gap 

TD Cowen analyst Jonna Kim raised Gap's price target to $27 from $23 while maintaining a ‘Buy’ rating, implying a 108% upside potential from the stock’s last closing price. Kim said comparable sales came in about 4% below expectations, but the result still outperformed the market’s more pessimistic assumptions. 

The company also narrowed its full-year comparable-sales outlook to roughly flat to 1% growth, compared with its previous range of flat to +1%. Gap stock also gained nearly 17% in August compared to a 8% gain in July.

Morgan Stanley also raised its price target, moving it to $23 from $21 while keeping an ‘Equal Weight’ rating. The firm described the Q2 performance as “better than feared” and said it has become “more constructive” about the retailer’s longer-term earnings potential. 

However, analysts want additional evidence that Old Navy can deliver the improvement management expects during the back half of the year. Gap stock edged 0.2% lower overnight ahead of Monday, after recording its best week in over a year. 

Gap’s Old Navy Emerges As Key Focus

Wells Fargo lifted its price target on Gap to $23 from $22 with an ‘Equal Weight’ rating. The firm highlighted Old Navy as the biggest positive surprise from the Q2 earnings report, arguing that concerns about the chain’s collapse failed to materialize. Investors had expected weaker results, but the company instead delivered an outcome that provided some relief.

Wells Fargo remains cautious about Gap’s near-term outlook. Analysts are watching whether Old Navy can keep improving and deliver the turnaround the company expects. 

Gap is also changing leadership at Old Navy. Michael Francis will take over as the brand’s president and CEO on Nov. 2, replacing Haio Barbeito.

GAP stock: Retail Stance 

On Stocktwits, retail sentiment around the stock remained in ‘extremely bullish’ territory. 

A user said, “Smoked this for 25% last week, sold half my stake (500 shares) at $25, long the remaining 500. I could see this dropping to around $22 due to more profit-taking and broader economic uncertainty, before marching back up to $25 or higher.”

GAP stock has declined over 8% year-to-date. 

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