Gap Inc (GAP) Stock Forecast & Price Target

Gap is supported by a broad-based brand turnaround, with the namesake banner delivering 11 consecutive quarters of comp-sales growth and the company posting 2025 sales growth of 2% alongside 2.8% comparable sales growth. Old Navy’s stabilization under Richard Dickson, plus improving execution at Banana Republic and signs of normalization at Athleta, suggest the portfolio is regaining relevance through better product, sharper marketing, and stronger merchandising. Fundamentally, the case is reinforced by 40.8% FY25 gross margin, $2.9 billion of cash and equivalents, and ongoing buybacks and dividends, while valuation remains discounted versus peers despite room for margin expansion and improved earnings power.

Gap is facing a weak fundamental setup because its largest brand, Old Navy, accounts for over 55% of annual revenue yet saw comp growth slow from 1% in 1Q26 to -4% in 2Q26, raising concern that execution issues may be more structural than transitory. Athleta adds further pressure, with revenue likely to fall below $1.1 billion, more than 25% below its FY22 peak of nearly $1.5 billion, as the athleisure market remains crowded and increasingly promotional. With FY26 revenue growth still only around 1%-2% and EBIT margin guided at 7.4%-7.6%, there appears to be limited operating leverage, making meaningful EPS expansion difficult without greater brand recovery.