Gap Inc (GAP) Stock Forecast & Price Target

Gap Inc. demonstrated a robust financial performance with total sales growing by 3.0% year-over-year to $3.942 billion, surpassing consensus expectations. The company ended the third quarter with a strong cash position of $2.5 billion, reflecting a 13% year-over-year increase, which supports its operational flexibility. Furthermore, despite challenges such as tariff impacts leading to a 5% increase in inventory costs, Gap's ability to re-establish its brands resulted in improved sales and gross margin leverage, indicating a positive trend in overall business fundamentals.

Gap has reported a gross margin decline of approximately 30 basis points to 42.4%, which is worse than the previously guided decrease of 150-170 basis points. The company's comparable sales for the third quarter fell by 11% year-over-year, significantly underperforming against last year's growth of 5% and indicating a consistent downward trend in performance. Additionally, expectations for operating margin contraction are projected at 180 basis points, resulting in a forecasted operating margin of 7.5%, which is slightly below market consensus.