GAP Stock Rises Pre-Market: Jefferies Turns Bullish On Retailer’s ‘Turnaround’ Story

• Jefferies sees a "significant upside" in Gap's beauty segment and believes that Wall Street was underestimating this opportunity.
• In September, Gap said that it was expanding its product lineup to include beauty and adding more accessories at its Old Navy banner
• Jefferies noted that there remains "meaningful upside" for the shares, particularly as Athleta's recovery gains traction.

Gap Inc. (GAP) shares rose nearly 2% in premarket trading on Friday after Jefferies upgraded the stock to ‘Buy’ from ‘Hold,’ noting that the apparel maker’s new management has delivered a "strong turnaround" at both the Gap and Old Navy brands.

Jefferies also lifted its price target on Gap to $30, from $22, according to TheFly. The firm noted that there remains "meaningful upside" for the shares, particularly as Athleta's recovery gains traction.

In 2023, Gap appointed Richard Dickson as CEO to revive its fortunes. Dickson is known for turning around the Barbie brand at Mattel, and so far at Gap, has been able to help the company stabilize its sales and attract customers to its Old Navy and namesake brand.

Gap’s Beauty Segment

Jefferies sees a "significant upside" in Gap's beauty segment and believes that Wall Street was underestimating this opportunity.

In September, Gap said that it was expanding its product lineup to include beauty and adding more accessories at its Old Navy banner as part of an attempt to boost sales at its stores.

The company had then said that it sees a clear and meaningful opportunity to expand into the beauty category, with plans for a phased launch. Gap noted that in 2026, it plans to scale its Old Navy beauty business, as well as launch brand-right expressions across the portfolio.

New Partnerships Under Dickson

On Thursday, DoorDash and Old Navy announced a partnership that would help shoppers nationwide get everything from denim to activewear delivered to their doors through the delivery firm.

Retail sentiment on Gap remained unchanged in the ‘neutral’ territory, with message volumes at ‘low’ levels, according to data from Stocktwits.

Shares of Gap have gained nearly 13% in the last 12 months. 

For updates and corrections, email newsroom[at]stocktwits[dot]com.

Also See: Jim Cramer Says Oracle And OpenAI Face Harsh Reality As The Year Of 'Magical Investing' Loses Steam

Share

·

Add us on