A number of key catalysts could drive more growth at Gap in the coming months, according to JPMorgan. The investment bank upgraded the stock to overweight and increased its price target by $2 to $30, which reflects more than 23% upside from Friday’s close. The stock is up about 16% year to date, trailing the broader market. GAP YTD mountain GAP, year-to-date Looking ahead, analyst Matthew Boss said the company is at an “inflection point” that could see its sales growing in the low- to mid-single digits. He cited total addressable market expansion at the Gap brand, an opportunity to accelerate Old Navy’s presence within its Active business and multiyear growth on the backs of Athleta’s new marketing strategy. The company selected Mattel executive Richard Dickson to be CEO last July and JPMorgan recently met with Dickson and CFO Katrina O’Connell. “After roughly ~1.5 years at the helm, CEO Dickson characterized the company at an inflection point moving to ‘continuous improvement’ from ‘fixing fundamentals’ following 4 straight quarters of revenue growth (+2.8% TTM) and 7 consecutive quarters of market share expansion (incl. +310bps in 3Q),” the analyst told clients in a Monday note. “Said differently, CEO Dickson’s ‘consistency’ playbook is built on a foundation of increased efficiency (i.e. inventory mgmt, marketing, operational savings) and flywheel reinvestment (ala best in class brands) to drive multi-year growth.” In the near term, the analyst also noted the company’s already positive performance amid this year’s holiday shopping season. “Management cited a ‘strong start’ to the Holiday season, with 1H November comps improving on cooler weather and rebounding back to August’s comp trend (+MSD % by our estimates) with a deliberate focus on ‘winning early’ through merchandising and marketing campaigns across the brands to get ahead of the condensed calendar,” Boss also said. That said, Wall Street has taken a relatively neutral stance on the name. Among the 20 analysts covering it, 11 have a hold rating, while eight have a strong buy or buy rating. Its average target of $27.99 still reflects some more gains, however, implying more than 15% upside ahead, as of Friday’s close. The stock rose about 4% in the premarket on the heels of Boss’s call.
