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The Gap, Inc.: A Resilient Company Showing Fruits Of Turnaround Efforts
Summary
- Gap, Inc. is poised for growth with new leadership and strategic changes, building on cost initiatives from 2022-2023 to drive sales and earnings growth.
- Key hires, including CEO Richard Dickson, are revitalizing brands, with a focus on brand image, cultural relevance, and cost/inventory efficiency, and are boosting sales and profit growth.
- My base case implies $1.91 NTM EPS and $2.24 FY25 EPS, with a conservative 13.5x P/E, implying price targets of $25.80 and $30.24, respectively.
- Gap, Inc. is well-positioned against fast-fashion competition, economic downturns, and cost increases, leveraging its brand relevance, value proposition, and supply chain efficiencies.
Former-PE investor who enjoys analyzing consumer, industrials and business services stocks. Idea generation is primarily centered around thinking through second-order effects of macro trends to identify subsectors within which there will be winners and losers, then taking a bottoms-up approach to find compelling contrarian standalone or pair trades.
Analyst’s Disclosure:I/we have a beneficial long position in the shares of GAP either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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