Investors in The Gap, Inc. (NYSE:GAP) had a good week, as its shares rose 2.4% to close at US$23.15 following the release of its full-year results. The result was positive overall - although revenues of US$15b were in line with what the analysts predicted, Gap surprised by delivering a statutory profit of US$2.20 per share, modestly greater than expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Gap

Following last week's earnings report, Gap's 17 analysts are forecasting 2026 revenues to be US$15.3b, approximately in line with the last 12 months. Statutory earnings per share are predicted to accumulate 2.7% to US$2.30. In the lead-up to this report, the analysts had been modelling revenues of US$15.4b and earnings per share (EPS) of US$2.15 in 2026. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target was unchanged at US$28.14, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Gap analyst has a price target of US$34.00 per share, while the most pessimistic values it at US$24.50. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's also worth noting that the years of declining revenue look to have come to an end, with the forecast stauing flat to the end of 2026. Historically, Gap's top line has shrunk approximately 0.1% annually over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 5.0% per year. Although Gap's revenues are expected to improve, it seems that it is still expected to grow slower than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Gap following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Gap's revenue is expected to perform worse than the wider industry. The consensus price target held steady at US$28.14, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Gap analysts - going out to 2028, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 2 warning signs for Gap that you need to be mindful of.

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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.