Wells Fargo announced on Friday that it had raised its price target on Gap shares from $16 to $20, the day after the publication of the ready-to-wear group's quarterly accounts.
Despite high expectations, the apparel specialist delivered the most impressive performance of the entire U.S. earnings season, the California-based bank points out in a note.
Although the bar was set very high due to the recent bout of optimism that has gripped the stock, Gap managed to exceed the market's highest expectations, Wells Fargo continues.
While the U.S. firm is particularly impressed by the performance of the Old Navy brand, it points out that Gap's flagship store also did much better than expected, showing that the introduction of a new management team is 'already beginning to bear fruit'.
With a favorable base effect, this inflection point is a key element for the stock, concludes the bank, which believes that this situation gives rise to increased visibility on the stock's upward potential.
Wells Fargo - which has an 'overweight' recommendation on Gap - says it still considers the stock its 'top pick' within the sector.
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The Gap, Inc. is a specialty apparel company in America. The Company offers apparel, accessories and personal care products for women, men and children. Its Old Navy, Gap, Banana Republic, and Athleta brands offer clothing, accessories and lifestyle products for men, women and children. It is an omni-channel retailer, with sales to customers both in stores and online, through Company-operated and franchise stores, websites, and third-party arrangements. Its omni-channel services, including buying online pick-up in store, order-in-store, find-in-store, and ship-from-store, as well as enhanced mobile-enabled experiences, are tailored across its collection of brands. Gap includes adult apparel and accessories, GapKids, babyGap, Gap Maternity, GapBody, and GapFit collections. Banana Republic is a premium lifestyle retailer celebrating exploration and self-expression through timeless quality, versatile fabrics, and exceptionally made womenswear, menswear, and home designs.