Gap (GAP) Is Up 8.5% After Raising Outlook on Q3 Results Is Its Turnaround Gaining Momentum?

• The Gap, Inc. recently reported third quarter 2025 results, with US$3.94 billion in sales and US$236 million in net income, and raised its full-year outlook for both sales growth and net interest income.
• Commentary from industry figures and management pointed to brand improvements, successful turnaround initiatives, and renewed focus on customer experience as supporting factors in these results.
• We'll explore how Gap's raised full-year guidance and stronger operational performance could shape its investment narrative going forward.

We've found 15 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

Gap Investment Narrative Recap

To be a Gap shareholder, you need to believe in the company's ability to boost brand relevance, execute its turnaround strategy, and maintain steady sales growth despite industry headwinds. While the recent results showcased improved sales, the flat net sales trend and pressured margins mean the short-term catalyst remains linked to sustained consumer demand and operational discipline. The biggest risk, exposure to competitive pressure and fashion misalignment, remains largely unchanged after these results.

The most relevant announcement to this catalyst is Gap’s raised full-year sales growth outlook, now expecting 1.7% to 2.0% net sales growth. This signals management's confidence in ongoing brand and operational improvements, but investors are likely to continue watching for signs of consistency in demand across core categories and brands.

Yet, while sales momentum is gaining attention, the risk of continued competitive threats and changing consumer tastes is information Gap investors should be aware of...

Read the full narrative on Gap (it's free!)

Gap's outlook forecasts $16.0 billion in revenue and $956.2 million in earnings by 2028. This relies on analysts' expectations of 1.8% annual revenue growth and a $67.2 million earnings increase from the current $889.0 million.

Uncover how Gap's forecasts yield a $26.03 fair value, a 4% downside to its current price.

Exploring Other Perspectives

Nine Simply Wall St Community members see Gap’s fair value between US$19 and US$30.73. With competitive threats still material, these varied fair value views highlight the importance of considering several different viewpoints.

Explore 9 other fair value estimates on Gap - why the stock might be worth as much as 14% more than the current price!

Build Your Own Gap Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Gap research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.
• Our free Gap research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Gap's overall financial health at a glance.

Contemplating Other Strategies?

Our daily scans reveal stocks with breakout potential. Don't miss this chance:

• Rare earth metals are an input to most high-tech devices, military and defence systems and electric vehicles. The global race is on to secure supply of these critical minerals. Beat the pack to uncover the 35 best rare earth metal stocks of the very few that mine this essential strategic resource.
• These 13 companies survived and thrived after COVID and have the right ingredients to survive Trump's tariffs. Discover why before your portfolio feels the trade war pinch.
• Uncover the next big thing with financially sound penny stocks that balance risk and reward.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com