Gap Inc (GAP) Stock Forecast & Price Target

Gap is viewed positively because its turnaround is gaining traction through better product execution, improved marketing, and stronger discipline across the portfolio, with Old Navy’s recent weakness increasingly tied to fixable seasonal assortment issues rather than demand collapse. Financially, the company reported 2Q net sales of $3.65 billion, adjusted gross margin of 41.4%, operating margin of 7.1%, and $2.3 billion of inventory, while 2025 delivered a 2% annual sales increase, 2.8% comparable sales growth, and $2.9 billion of cash, the highest in 15 years. The outlook is further supported by multiple consecutive quarters of positive comps, better full-price sell-through at the Gap brand, shareholder returns of $726 million through buybacks and dividends, and additional upside from Athleta, beauty, accessories, and expanded lifestyle offerings.

Gap is facing a negative outlook because its brand performance is increasingly uneven: the core Gap label is delivering strong comps, but Old Navy, which generates more than half of sales, has been a persistent drag with sales and comps down 4% in one period and only modestly positive in another. Margin pressure is another concern, as 1Q26 adjusted gross margin fell to 40.5% and operating margin dropped to 5.2%, hurt by about 200 bps of tariff headwinds and SG&A deleveraging to 35.3% of sales. Although inventory discipline and better merchandise margins helped, Athleta’s double-digit comp declines and mixed Banana Republic results suggest the recovery is not broad-based enough to fully offset Old Navy weakness.