Research
BMO Capital Initiates Coverage on Gap With Market Perform Rating
Gap (GAP) has an average rating of overweight and mean price target of $27, according to analysts polled by FactSet.
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Sectors
Sector Update: Consumer Stocks Rise Late Afternoon
Consumer stocks were higher late Friday afternoon, with the State Street Consumer Staples Select Sector SPDR ETF (XLP) increasing 0.4% and the State Street Consumer Discretionary Select Sector SPDR ETF (XLY) adding 1%.US consumer sentiment dropped in August amid concerns that inflation will continue to be high for the "foreseeable future," final results of a University of Michigan survey showed Friday. The main sentiment index fell 6.3% sequentially to 51.7 this month. The gauge for current economic conditions decreased to 51.9 from 54.8, while the index of consumer expectations slid 7% to 51.5, according to the survey.In corporate news, Walt Disney's (DIS) Disney+ said Friday it signed a global distribution deal with The Pokemon Company International that includes a new stop-motion series created by Aardman, titled "Pokemon Tales: The Misadventures of Sirfetch'd & Pichu," set to debut on Disney XD and stream exclusively on Disney+ in 2027. Disney shares rose 1.1%.Lucid (LCID) is recalling 27,185 of its Air luxury US sedans because an exterior lighting circuit could overheat and increase the risk of a fire, Reuters reported, citing the US National Highway Traffic Safety Administration. Lucid is distributing an online software patch to fix the defect, with 20,719 affected vehicles already receiving the update, the report said. Lucid shares were down 1.9%.Walmart (WMT) has settled a US government lawsuit alleging its pharmacies unlawfully dispensed opioids and other controlled substances, Reuters reported Friday, citing a Justice Department statement. Walmart shares were up 0.3%.Gap (GAP) shares jumped 13% after the company raised its fiscal 2026 adjusted earnings guidance.
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Sectors
Sector Update: Consumer Stocks Rise Friday Afternoon
Consumer stocks were higher Friday afternoon, with the State Street Consumer Staples Select Sector SPDR ETF (XLP) increasing 0.4% and the State Street Consumer Discretionary Select Sector SPDR ETF (XLY) adding 0.7%.US consumer sentiment dropped in August amid concerns that inflation will continue to be high for the "foreseeable future," final results of a University of Michigan survey showed Friday. The main sentiment index fell 6.3% sequentially to 51.7 this month. The gauge for current economic conditions decreased to 51.9 from 54.8, while the index of consumer expectations slid 7% to 51.5, according to the survey.In corporate news, Walmart (WMT) has settled a US government lawsuit alleging its pharmacies unlawfully dispensed opioids and other controlled substances, Reuters reported Friday, citing a Justice Department statement. Walmart shares were up 0.2%.Gap (GAP) shares jumped 13% after the company raised its fiscal 2026 adjusted earnings guidance.Fox (FOX) could still be part of a future re-merger with News Corp. (NWSA), Reuters reported Thursday, citing court filings and testimony tied to the Murdoch family succession dispute. Fox shares rose 1.6%, and News Corp. was shedding 0.6%.
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US Markets
Gap Momentum Encouraging, Old Navy Weakness Seen Continuing, BofA Says
Gap's (GAP) momentum is encouraging, but pressure within the Old Navy brand will likely continue amid a tough macroeconomic backdrop, BofA Securities said in a note Friday.The apparel retailer late Thursday reported a comparable sales decline of 1% in the fiscal second quarter, with the Gap brand posting 10% growth, while Old Navy declining 4%. Old Navy's print was weaker than BofA's estimate that called for a 2% drop.Gap attributed the comparable sales decline at Old Navy to pressure in the women's seasonal assortment, as well as an unexpected slowdown in traffic."We are encouraged by momentum at Gap but remain concerned that Old Navy's lower-end customer will continue to be pressured by the tough macro climate," BofA analysts Lorraine Hutchinson and Mary Sport said.Gap named Chief Customer Officer Michael Francis as CEO of Old Navy, effective Nov. 2. Francis succeeds Haio Barbeito, who will step into an advisory role."We have work to do at Old Navy, but we have a clear understanding of the factors that impacted performance and are taking targeted actions that are already driving improved results," Gap CEO Richard Dickson said in a statement.Gap's shares jumped 13% intraday Friday, reducing year-to-date losses to 8.5%.Management is investing in sharper pricing in the second half to improve Old Navy's value proposition, "which should help to stabilize sales," Hutchinson and Sport said.The company's adjusted earnings per share for the quarter ended Aug. 1 totaled $0.52, exceeding the FactSet-polled estimate of $0.48 and BofA's $0.50. Net sales declined 2% to $3.65 billion, missing the Street's view of $3.69 billion."While not the revenue outcome we wanted, continued operational and financial rigor contributed to gross margin strength," Dickson said during the earnings call on Thursday, according to a FactSet transcript. "We also maintained market share, reflecting the continued resonance of our brand portfolio."Second-quarter adjusted gross margins improved 20 basis points year on year, excluding the $417 million benefit from tariff refunds, according to the note.BofA raised its price objective on Gap's stock to $27 from $26, and retained its neutral rating.For fiscal 2026, the company raised adjusted EPS guidance to between $2.35 and $2.45 from $2.30 to $2.40 previously expected. It narrowed net sales growth outlook to 1% to 1.5% annually from 1% to 2%. Analysts expect EPS of $2.41 and revenue growth of 1.1%.The brokerage raised its fiscal 2026 EPS estimate by 2% to $2.39 and the 2027 outlook by 4% to $2.58."As we move into the third quarter, the headwind from summer categories becomes much less significant," the CEO told analysts. "This gives us a clear runway for improvement, as key categories like denim, active, sweaters and knits drive the business."Earlier this week, apparel retailer Abercrombie & Fitch (ANF) raised its full-year outlook as tariff-related refunds propelled its fiscal second-quarter results above Wall Street's expectations. American Eagle Outfitters (AEO) is slated to announce its results next month.Price: $23.49, Change: $+2.70, Percent Change: +12.96%
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Wire
Top Midday Gainers
Elastic (ESTC) shares soared 17% amid heavy trading Friday after the company reported overnight higher fiscal Q1 non-GAAP earnings and revenue.Intraday trading volume jumped to over 6.17 million from a daily average of about 2.17 million.Quoin Pharmaceuticals (QNRX) has entered into a securities purchase agreement with new and existing healthcare-focused institutional investors to raise up to about $50.0 million in gross proceeds, it said Friday.Shares surged 27% as intraday trading volume catapulted to over 28.4 million from a daily average of roughly 238,000.Gap (GAP) shares jumped 13% amid heavy trading after the company raised its fiscal 2026 adjusted earnings guidance.More than 16.7 million shares of the company traded intraday compared with a daily average of about 7.74 million.Price: $98.06, Change: $+14.32, Percent Change: +17.10%
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Wire
Gap's EPS Growth Seen Accelerating on Brand Momentum, Buybacks, UBS Says
Gap (GAP) is expected to see stronger earnings per share growth, driven by sustained momentum at the Gap brand, continued share repurchases and gradual improvement at Old Navy and Athleta, UBS Securities said in a note Friday.The analysts said they see the company's growth plan coming together, while the market stays focused on Old Navy. Gap is investing in new stores, beauty and accessories, partnerships, better products and marketing, and margin expansion, while strengthening its leadership team.The analysts added that the Gap brand delivered Q2 comparable sales growth of 10% and noted that Old Navy is struggling.The analysts said fiscal 2026 is a transition year and expect 12% EPS growth. They forecast 23% EPS growth in fiscal 2027, up from 12% in fiscal 2026. They expect the company's initiatives to support mid-teens EPS growth over the next several years."Plus, Gap's stock buybacks continue to surprise. We see a very favorable upside/downside skew," according to the note.UBS raised its price target on Gap to $42 from $40 while reiterating its buy rating.The company's shares were up nearly 14% in Friday afternoon trading.Price: $23.62, Change: $+2.83, Percent Change: +13.59%
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Wire
Gap Momentum Offsets Weakness at Old Navy, BofA Says
Gap (GAP) reported a mixed Q2 performance, with momentum at Gap brand offset by uncertainty at Old Navy, BofA Securities said in a Friday note."We are encouraged by momentum at Gap but remainconcerned that Old Navy's lower-end customer will continue to be pressured by the tough macro climate," the note said.While comparable sales grew 10% at Gap, Old Navy recorded a 4% decline, driven by seasonal product that didn't resonate and a marketing campaign that failed to drive traffic, the note said.Looking ahead, the report said Old Navy entered Q3 with "cleaner" inventory levels and is seeing a positive response to its Fall product line, resulting in improved trends in August.BofA kept its neutral rating while raising its price target to $27 from $26 on the back of higher earnings estimates.Price: $23.77, Change: $+2.98, Percent Change: +14.33%
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Sectors
Sector Update: Consumer Stocks Higher Pre-Bell Friday
Consumer stocks were higher premarket Friday, with the State Street Consumer Staples Select Sector SPDR ETF (XLP) advancing 0.4% and the State Street Consumer Discretionary Select Sector SPDR ETF (XLY) gaining 0.1%.Gap (GAP) shares were up more than 13% after the company raised its 2026 adjusted earnings guidance.Chagee (CHA) stock was down 4% after the company reported lower Q2 non-GAAP net income.Toyota Motors (TM) shares were 1% higher after Nikkei Asia reported late Thursday that the company is planning to build an electric Sports Utility Vehicle in China.
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Sectors
Sector Update: Consumer
Consumer stocks were higher premarket Friday, with the State Street Consumer Staples Select Sector SPDR ETF (XLP) advancing 0.5% and the State Street Consumer Discretionary Select Sector SPDR ETF (XLY) gaining 0.1%.Gap (GAP) shares gained more than 18% after the company raised its 2026 adjusted earnings guidance.
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Asia Markets
Update: US Equity Futures Mostly Flat Pre-Bell as Traders Await Fed Chair's Keynote Speech
(Updates with economic data, recent oil price movement, world markets' overview and corporate stock movements.)US equity futures were mostly flat pre-bell Friday as traders awaited a highly anticipated keynote speech from Federal Reserve Chair Kevin Warsh.Dow Jones Industrial Average futures were 0.2% higher, S&P 500 futures were up 0.1%, and Nasdaq futures were 0.2% lower.Warsh is slated to speak at 10 am ET at the central bank's annual symposium in Jackson Hole, Wyoming, and traders will be looking for signals on where interest rates could go next.President Donald Trump on Thursday told reporters that the US is not talking to Iran. The US has turned to elevated economic pressure to force a reopening of the Strait of Hormuz and threatened Iran's trading partners. Iran's foreign ministry, in a letter published on Telegram, urged other countries not to implement US sanctions against it, calling the measures illegal.Oil prices were lower, with front-month global benchmark North Sea Brent crude down 0.9% at $87.72 per barrel and US West Texas Intermediate crude 1% lower at $82.67 per barrel.The Chicago purchasing managers index for August, due at 9:45 am ET, is seen coming in at 57.9, up from its prior value of 57.6, according to estimates compiled by Bloomberg.The final University of Michigan consumer sentiment report for August, scheduled at 10 am ET, is expected to show consumer sentiment index coming in at 51.0, unchanged from the prior period.In other world markets, Japan's Nikkei closed 0.4% higher, Hong Kong's Hang Seng ended 0.1% higher, and China's Shanghai Composite finished 0.1% lower. Meanwhile, the UK's FTSE 100 was up 0.2%, and Germany's DAX index was 0.5% higher in Europe's early afternoon session.In equities, Marvell Technology (MRVL) shares fell 7.7% after the company reported fiscal Q2 financial results late Thursday. PayPal (PYPL) stock was down more than 14% after Bloomberg reported that buyout firm Advent and payment-processor Stripe have abandoned their bid to buy the company. Autodesk (ADSK) shares were down 4.8% after the company issued lower-than-expected Q3 adjusted EPS guidance.On the winning side, Gap (GAP) stock rose over 17% after the company lifted its fiscal 2026 adjusted earnings guidance. Affirm (AFRM) shares were more than 13% higher after the company reported an increase in fiscal Q4 earnings and sales in addition to issuing an upbeat fiscal Q1 sales outlook.
Dow JonesNasdaq CompositeS&P 500$ADSK$AFRM$GAP$MRVL$PYPL
Wire
Abercrombie & Fitch Lifts Full-Year Outlook as Fiscal Second-Quarter Results Top Views
Abercrombie & Fitch (ANF) raised its full-year outlook on Wednesday as tariff-related refund benefits helped the apparel retailer post fiscal second-quarter results above Wall Street's estimates.The company now anticipates adjusted earnings to be in a range of $13.10 to $13.60 per share for fiscal 2026, up from its prior guidance of $10.20 to $11. Sales are pegged to grow by around 5%, reflecting the higher end of the retailer's previously issued forecast. The current consensus on FactSet is for non-GAAP EPS of $10.72 and for sales to increase by 3.5%.Shares of Abercrombie & Fitch spiked 36% in Wednesday trade, taking its year-to-date gain to 16%.The retailer received $100 million in refunds in the second quarter related to the International Emergency Economic Powers Act tariffs and expects the benefit to have a favorable impact of about 220 basis points on its operating margin for the fiscal year, Chief Financial Officer Robert Ball said during an earnings call, according to a FactSet transcript. The metric is projected to be in between 14.5% and 15%, up from prior expectations of 12% to 12.5%."Our first half execution and strong start to August support a higher full-year sales expectation and an increase to our operating margin and EPS outlook," Ball said on the call.Earlier this year, the US Supreme Court ruled that the Trump administration lacked authority under the IEEPA to impose certain tariffs, paving the way for refunds to companies that had paid the duties.Abercrombie & Fitch's adjusted EPS jumped to $4.17 for the quarter ended Aug. 1 from $2.32 the year before, well above the Street's view for $1.99. Tariff-related refunds were a benefit of $1.75 to the bottom line. Sales improved 5% to $1.27 billion, topping the average analyst estimate of $1.25 billion."Growth was balanced across our brands and regions, highlighted by accelerating momentum in the Americas and improving trends in (Europe, the Middle East and Africa)," the retailer's chief executive, Fran Horowitz, said in the earnings release. "Both brands achieved record second quarter net sales."Revenue for the Abercrombie brand grew 8% for the quarter, while Hollister's sales inclined 2%. Revenue advanced across all regions, led by a 19% jump in Asia Pacific.In a note emailed Tuesday, UBS Securities said it expected Abercrombie & Fitch to post better-than-expected quarterly results, but with limited upside as the market would have already priced in a similar outcome.For the ongoing three-month period, the retailer anticipates per-share net income to be in a range of $2.90 to $3.20, with sales rising by 5% to 6%. The Street is looking for EPS of $2.82 and sales growth of 4.3%.Abercrombie & Fitch is expecting $20 million in tariff-related refunds in the third quarter, boosting its EPS by $0.35 and operating margin by about 160 basis points, Ball told analysts on the call.Urban Outfitters (URBN) is scheduled to release its latest financial results after the markets close Wednesday, while Gap (GAP) posts its earnings on Thursday. American Eagle Outfitters (AEO) is slated to announce its results next month.Price: $144.52, Change: $+35.62, Percent Change: +32.70%
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Wire
Gap Seen With Balanced Upside/Downside Skew Around Upcoming Fiscal Q2 Earnings, UBS Says
Gap (GAP) is seen having a balanced upside/downside skew around its upcoming fiscal Q2 earnings, UBS said in a note emailed Wednesday.The company is set to report fiscal Q2 financial results on Aug. 27.UBS analysts expect Old Navy's fiscal Q2 comparable store sales to have a larger decline than the consensus estimate of a 2% decrease, due to its recovery from a Q1 seasonal category underperformance still ongoing and World Cup inventory selling worse than expected. This factor is the main downside risk, as it could raise investor concerns on the recovery pace of sales for H2, according to the note.On the other hand, the analysts see potential upside to fiscal 2026 gross margins if tariff changes implemented after July allows the company to release its financial reserve set aside for tariff-related costs.The analysts said they concur with the options market that the earnings report could be a "high-volatility event."UBS' rating on the company's stock is buy with a price target of $40.Price: $20.10, Change: $+0.02, Percent Change: +0.07%
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Wire
Gap Shares Fall After Jefferies Downgrade
Gap (GAP) shares were down 3.4% in Wednesday trading after Jefferies downgraded the stock to hold from buy and adjusted its price target to $23 per share from $29.Trading volume stood at over 3.6 million shares, compared with a daily average of about 8 million.Price: $20.23, Change: $-0.73, Percent Change: -3.48%
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Research
Jefferies Downgrades Gap to Hold From Buy, Adjusts Price Target to $23 From $29
Gap (GAP) has an average rating of overweight and mean price target of $26.07, according to analysts polled by FactSet.
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Research
Barclays Downgrades Gap to Equal Weight From Overweight, Adjusts PT to $20 From $26
Gap (GAP) has an average rating of overweight and mean price target of $26.87, according to analysts polled by FactSet.
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Research
Wells Fargo Downgrades Gap to Equal Weight From Overweight, Adjusts PT to $22 From $26
Gap (GAP) has an average rating of overweight and mean price target of $26.87, according to analysts polled by FactSet.
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Wire
Top Midday Decliners
AST SpaceMobile (ASTS) and other space-related firms saw their stock prices drop in Friday trading after Blue Origin's New Glenn rocket exploded Thursday night during a hot-fire test at a Space Force facility in Cape Canaveral, Florida.Shares of AST fell more than 15% following an increase in intraday trading volume to over 32.4 million from a daily average of about 18.0 million.Redwire (RDW) shares dropped 7%, with intraday trading volume rising to over 39.3 million from a daily average of about 30.6 million.Gap (GAP) reported slower-than-expected growth in fiscal Q1 revenue late Thursday, undermining its narrow adjusted earnings beat.Shares slumped 16% as intraday trading volume soared to more than 17.9 million from a daily average of about 8.2 million.Price: $112.18, Change: $-20.92, Percent Change: -15.71%
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Research
Evercore ISI Downgrades Gap to In Line From Outperform, Adjusts Price Target to $20 From $28
Gap (GAP) has an average rating of overweight and mean price target of $27.86, according to analysts polled by FactSet.
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Research
JPMorgan Downgrades Gap to Neutral From Overweight, Adjusts Price Target to $27 From $35
Gap (GAP) has an average rating of overweight and mean price target of $27.86, according to analysts polled by FactSet.
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Research
Research Alert: Gap Posts Mixed Quarter; Raises Eps Guidance
CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:GAP delivered mixed Q1 2026 results with net sales of $3.5B (+1% Y/Y), $27M below estimates, though comparable sales rose 2% for the ninth consecutive quarter. Gross margin of 40.5% declined 130 bps Y/Y due to tariff headwinds of approximately 200 bps impact. The standout was Gap brand's exceptional 10% comparable sales growth, representing one of its strongest performances in over two decades driven by culturally relevant storytelling and strength in denim and fleece. The company raised full-year EPS guidance to $2.30-$2.40 from $2.20-$2.35, expecting $80M of net tariff relief concentrated in Q2 and Q3. GAP returned $464M to shareholders through buybacks and dividends, including a $200M accelerated share repurchase program. Shares fell 13% after-hours and trade at 10x full-year EPS guidance. We believe the after-hours move is an overreaction and are impressed with Gap brand strength. We think the company's buyback program and pricing power help offset tariff impacts.
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