UBS Upgrades Gap to Buy, Raises Price Target to $41
Written by Emily J. Thompson, Senior Investment Analyst
Source: CNBC
- Rating Upgrade: UBS upgraded Gap from neutral to buy and raised the 12-month price target from $26 to $41, implying a 54% upside from Wednesday's close, reflecting strong confidence in Gap's future growth potential.
- Sales Growth Expectations: Analyst Jay Sole anticipates that Gap's sales and earnings growth will be driven by improving revenue growth for Athleta and the successful implementation of initiatives in the beauty and handbag sectors, further enhancing overall performance.
- Earnings Forecast Increase: The analyst now expects Gap's fiscal 2026 earnings growth to reach 14%, up from just 2% in fiscal 2025, while also raising the five-year compound annual growth rate forecast from 3% to 10%, indicating optimism about the company's long-term growth prospects.
- Market Opportunity Assessment: Sole noted that Gap's investments in beauty and accessories are expected to be accretive to the company's gross margin, suggesting that the market may be underestimating the growth opportunities in this area, thereby strengthening Gap's competitive position.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
