Barclays believes that Gap has what it takes to hedge against future potential tariff pressures, making the outlook for the Old Navy parent more constructive. The bank upgraded the clothing retailer to an overweight rating from equal weight. Analyst Adrienne Yih also hiked her price target to $30 per share from $19, which implies 24% upside from Friday’s close. Yih touted the disciplined leadership strategy under Gap CEO Richard Dickson and CFO Katrina O’Connell, which has helped elevate Gap’s brand and drive sustainable growth for the company. GAP YTD mountain GPS YTD chart “GAP’s strategy is focused on rebuilding long-term brand equity through product innovation, customer targeting, and high-return marketing,” she wrote. “Our investment thesis is based on 1) leadership & brand focus driving market share gains, 2) operational discipline expanding margins, and 3) a flexible model to absorb tariff pressure.” Yih added that Dickson has prioritized customer engagement, marketing and product innovation and quality since July 2023. These efforts have resulted in increased brand recovery and momentum across the Gap, Old Navy and Banana Republic brands, she said. The company has also maintained strict cost and inventory controls. This combination of better products, targeted marketing and stronger brand resonance among consumers has helped usher in a successful early fall season for the company, Yih said. These tailwinds could also provide the company with a strong hedge against any tariff pressures. “While tariff pressures may impact margins in the short term, GAP is successfully driving full-price sales and fixed-cost leverage to offset such pressure,” Yih wrote. “While risks remain around price elasticity and uncertain consumer demand, we believe strong brand resonance and potential for consumer stimulus could help offset these pressures.” Shares of Gap are up a little more than 2% in 2025.
