Gap (GAP) shares are in the red as investors continue to punish the apparel retailer’s disappointing guidance reflecting tariff-related headwinds last week. The post-earnings selloff has pushed GAP’s relative strength index (14-day) into the mid-20s, indicating oversold conditions, which often trigger a relief rally.
Following this recent plunge, Gap stock is trading down about 23% versus its year-to-date high.
TD Cowen Maintains ‘Buy’ Rating on Gap Stock
While Gap's fiscal Q4 earnings came in line with expectations, the company forecasted revenue printing at a lower-than-expected $3.51 billion in the current quarter, largely due to struggling Athleta sales.
Plus, higher tariffs under President Donald Trump's administration resulted in a 200 bps decline in gross margins, and management admitted that tariffs will remain a significant headwind moving forward.
Still, TD Cowen analysts recommend loading up on GAP stock on the post-earnings dip.
In a research note dated March 9, the investment firm reiterated its “Buy” rating on the NYSE-listed firm with a $32 price target, indicating potential upside of 45% from here.
What Could Help GAP Shares Recover in 2026
TD Cowen believes the “brand reinvigoration playbook” is working, noting that a 7% comparable sales growth in the namesake GAP brand in the fourth quarter shows real staying power.
According to its analysts, the post-earnings hit to Gap shares is mostly because of high expectations and a crowded trade — not a fundamental breakdown.
Importantly, despite management’s warning, TD Cowen remains convinced that tariffs pressure on gross margins will abate in the second half of fiscal 2026.
The investment firm also highlighted the upcoming rollout of beauty and accessories as key catalysts for a sharp recovery in GAP.
A lucrative 3.12% dividend yield makes this clothing and accessories retailer even more attractive — at least for income investors.
What’s the Consensus Rating on Gap?
It's also worth mentioning that TD Cowen isn’t the only Wall Street firm that favors buying GAP shares on the post-earnings plunge.
The consensus rating on Gap also sits at “Strong Buy,” with the mean price target of about $31 indicating potential upside of roughly 40% from here.
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On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
