Gap gives back big gain as investors weigh short-term headwinds vs. long-term upside

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Gap (GPS -0.8%) swung wildly in Friday trading after posting a better-than-feared Q4 earnings report amid concerns over the impact of supply chain disruption and labor headwinds. Shares started off the premarket session up more than 8% before backtracking on a jittery day for the broad market.

Wells Fargo kept a positive view on the retailer following the print.

Analyst Ike Boruchow: "After a very disappointing 2H21, today's release can finally reset the story and bring back the bulls. While fundamentals are far from perfect, at current levels we see more risk than reward. Bigger picture, following a better than feared 4Q, the company has a major opportunity to transform into a compelling recovery story once again in 2022 (material freight pressure to lap, 2H revenue recapture oppy, Yeezy rollout, Athleta momentum/optionality)."

The firm raised FY21-FY22 estimates on Gap (NYSE:GPS) and maintained a price target of $25, which is well ahead of the average analyst price target of $19.95.

Dig into more details on Gap's earnings report and guidance update.