What Happened?
Shares of clothing and accessories retailer Gap (NYSE: GAP) jumped 2.5% in the afternoon session after BTIG initiated coverage on the company with a "Buy" rating and a $30 price target.
The analyst firm pointed to the growing relevance of Gap's brands as a key reason for its positive view. BTIG also noted the potential for the company to expand its operating margins, suggesting Gap could become more profitable. The firm projected that Gap could achieve double-digit operating margins in the future, a significant increase from its current level. Alongside the new rating, BTIG established earnings estimates for the clothing retailer, forecasting $2.10 per share for fiscal year 2025 and $2.25 for fiscal year 2026.
After the initial pop the shares cooled down to $21.38, up 3.7% from previous close.
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What Is The Market Telling Us
Gap’s shares are very volatile and have had 21 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 7 months ago when the stock dropped 22.2% after President Trump announced "reciprocal tariffs" on all US imports, set at a minimum rate of 10%. From clothing brands and electronics makers to the e-commerce sites that move their goods, companies built on global supply chains took the biggest hit. Stocks with heavy exposure to Asia were especially hard-hit, as the new tariffs threatened the growth and profits of firms with factories in the region. Vietnam, central to many companies' production plans, faced a 46% tariff. Cambodia and Indonesia were also in the crosshairs, with tariff rates of 49% and 32%. These measures could significantly erode the competitiveness of goods produced in those regions. For example, reduced production volumes would negatively affect the sales growth of all companies benefiting from these manufacturing hubs.
Gap is down 9.4% since the beginning of the year, and at $21.38 per share, it is trading 26% below its 52-week high of $28.89 from May 2025. Investors who bought $1,000 worth of Gap’s shares 5 years ago would now be looking at an investment worth $1,077.
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