Gap Inc (GAP) Stock Forecast & Price Target

Gap is attractive because its turnaround is being driven by concrete operational improvements rather than sentiment alone, with the Gap brand posting 11 consecutive quarters of comp-sales growth and Old Navy stabilizing under Richard Dickson’s “brand reinvigoration” strategy. The company is also expanding higher-margin adjacencies like beauty and accessories, while benefiting from stronger product, marketing, and cultural relevance, including 90’s/Y2K nostalgia and a durable denim tailwind. Financially, Gap generated 2025 sales growth of 2%, comparable sales up 2.8%, gross margin of 40.8%, and ended 2025 with $2.9 billion of cash, supporting shareholder returns through dividends and buybacks.

Gap is facing a negative setup because its largest engine, Old Navy, represents over 55% of annual revenue yet saw comp growth slow from 1% in 1Q26 to -4% in 2Q26, suggesting demand is weakening just as promotions are rising. Athleta, which contributes a high-single-digit percentage of consolidated revenue, has been in decline since FY22 and is expected to post another LDD-type drop in 2H, with revenues likely below $1.1 billion versus nearly $1.5 billion at the FY22 peak. With modest consolidated revenue growth, no expected SG&A leverage in FY26 or FY27, and margin pressure from heavier discounting, the company has limited ability to drive meaningful EPS expansion despite its low valuation multiples.