Gap Inc. Shares Surge Ahead of Earnings Report

NEW YORK, NY — Shares of Gap Inc. rose 3.2% on August 27, 2025, after positive quarterly results from competitors boosted confidence in the apparel retail sector. Abercrombie & Fitch and Kohl's exceeded analysts’ expectations for their second-quarter results, prompting Kohl’s stock to jump nearly 20%.

The encouraging news comes as Gap prepares to report its own quarterly earnings on Thursday, with increased market optimism surrounding its prospects. Telsey Advisory Group maintained a ‘market perform’ rating on Gap’s stock, setting a price target of $26.00, which suggests a potential upside of over 21% from the previous closing price. Following the initial rise, Gap’s shares settled at $22.31, reflecting a 3.4% increase from the prior day.

However, the volatility of Gap’s shares has been notable, as there have been 20 price movements greater than 5% over the past year. While today’s increase is significant, it does not appear to fundamentally change the market’s view of the company.

Concerns about the economy continue to impact investor sentiment. A recent Labor Department report revealed that the Producer Price Index (PPI) rose 0.9% in July, well above the expected 0.2% increase. This marked the largest monthly gain since March 2022, reigniting fears that rising costs may be passed onto consumers already wary of higher prices. Reports indicate that shoppers are cutting back on non-essential spending and opting for cheaper alternatives.

Year-to-date, Gap’s stock has declined 5.5%, trading at 22.8% lower than its 52-week high of $28.89 reached in May. If investors bought $1,000 worth of Gap shares five years ago, their investment would now be worth $1,283.

Despite mixed investor sentiment, Gap’s recent marketing campaign, ‘Better in Denim,’ has garnered over 20 million views and boosted brand interest ahead of its earnings report. Analysts believe the company is working towards operational improvements and strategic investments that could lead to a more favorable outlook.

Analysts suggest that Gap stock could be undervalued, with a projected fair value of $25.51, pending successful management of ongoing supply chain issues and maintaining profitability.