Gap Inc (GAP) Stock Forecast & Price Target

Gap Inc. reported a 3.0% year-over-year growth in total sales, reaching $3.942 billion, which exceeded market expectations, indicating a positive momentum in its financial performance. The company ended the third quarter with a robust cash position of $2.5 billion, reflecting a 13% increase compared to the previous year, which enhances its financial stability and flexibility. Additionally, improvements in online sales and store revenues underscore Gap's effective brand re-establishment and operational strategies, despite external challenges such as tariffs.

Gap's stock outlook is negatively impacted by a 30 basis point decline in gross margin to 42.4%, which significantly surpassed initial expectations for a 150 basis point decrease. Additionally, the company reported a year-over-year comp sales decline of 11% in the third quarter, further compounding the previously reported 9% drop in the last quarter, indicating a concerning trend in sales performance. Sales at Athleta also decreased by 11.4% year-over-year, mirroring the decline experienced last quarter and starkly contrasting with the growth recorded in the prior year, suggesting ongoing weaknesses across the brand portfolio.