Jefferies is moving off the sidelines when it comes to Gap . The bank upgraded the clothing chain to buy from hold. Analyst Corey Tarlowe also hiked his price target to the stock to $30 from $22, signaling about 24% upside. Tarlowe pointed to “encouraging and sustainable” trends in both the near- and long-term for Gap, stemming from fundamental changes that the retail chain has implemented. “We expect GAP to sustain strong momentum through brand revitalization and disciplined operations, supporting both top- and bottom-line growth,” he wrote. “These improvements stem from structural changes introduced under Richard Dickson’s leadership.” GAP YTD mountain GAP YTD chart A new opportunity in the beauty business could unlock significant growth for both Gap’s top and bottom lines, Tarlowe added. “GAP is expanding into the higher-margin beauty segment, a category with a resilient growth trajectory. U.S. beauty sales are projected to reach $153B by 2029, and even a modest share capture could generate hundreds of millions in incremental revenue and deliver meaningful EBITDA upside,” he said. Other catalysts include a turnaround at Athleta driven by new leadership. Same-store sales have also increased at both Gap and Old Navy, thanks to strong marketing campaigns that have driven recent engagement and traffic. Tarlowe believes that Gap’s earnings could reach $3 per share by fiscal year 2028. For the third quarter, he expects earnings of 62 cents per share, exceeding Wall Street’s consensus forecast of 58 cents per share. Gap is set to post Q3 results next week. Shares of Gap rose 1% following the upgrade. The stock has gained about 3% this year.
