Gap Inc. poised for turnaround following Wells Fargo upgrade

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Gap Inc. poised for turnaround following Wells Fargo upgrade
Credit: © Reuters.

Gap Inc (NYSE: GPS )., the parent company of Old Navy and Banana Republic, is expected to experience a significant turnaround, according to Wells Fargo (NYSE: WFC ) analysts. The company's stock price target has been raised from $11 to $16 per share, reflecting a 2.7% premarket increase Today and a 10% rise throughout 2023, a performance on par with the S&P 500 SPX.

This optimistic outlook is attributed to key leadership appointments within Gap Inc., including Richard Dickson and Chris Blakeslee, who are anticipated to revitalize the underperforming Athleta brand and enhance the company's responsive supply chain levers by moderating wholesale purchases.

Wells Fargo analysts further noted potential for additional cost savings beyond the company's targeted $550 million. With earnings targets set at 80 cents a share for 2023 and $1.15 a share for 2024 and potential earnings per share (EPS) of $2-plus by 2025, Gap's future profitability outlook appears promising.

The upgrade to overweight by Wells Fargo indicates a positive shift in perception towards Gap Inc.'s future performance, which could potentially lead to increased investor interest in the retail giant.

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