By Mackenzie Tatananni

Gap stock was rising solidly Monday after J.P. Morgan analysts upgraded shares of the retailer to Overweight from Neutral, citing steady gains in revenue and market share over the past few quarters.

The specialty retailer rose 3.3% to $25.05 following J.P. Morgan's upgrade of shares and a boost of its price target to $30 from $28.

Gap is the parent company of Old Navy, Banana Republic, and Athleta as well as the namesake apparel brand. The company is undergoing a multiyear turnaround strategy under CEO Ross Dickson, who took the helm in 2023.

Under Dickson's direction, Gap slashed 1,800 corporate roles and brought on board new executives including former Alo Yoga President Chris Blakeslee. The company has taken steps to become more relevant across its four brands, a move that has resonated with consumers.

Analyst Matthew Ross concluded that Dickson has laid a foundation "to support a consistent playbook of improved merchandising and marketing" across Gap's four brands.

"After roughly 1.5 years at the helm, CEO Dickson characterized the company at an inflection point moving to 'continuous improvement' from 'fixing fundamentals' following 4 straight quarters of revenue growth and 7 consecutive quarters of market share expansion," Ross wrote.

Gap reported adjusted earnings of 72 cents a share for the quarter ended Nov. 2, exceeding the FactSet consensus estimate of 58 cents. Revenue rose 2% from a year earlier to $3.8 billion, meeting analysts' expectations.

Dickson asserted the company's strong "performance year-to-date" empowered Gap to raise its fiscal-year outlook for sales, gross margin, and operating income growth.

In his note, Ross cited the merchandising and marketing campaigns intended to help Gap get ahead of the "condensed" holiday season calendar.

The analyst identified steps the company was taking to reach new customers, including "relevant media/marketing strategies" and "unique collaborations to drive relevance within the brand."

Ross also raised his earnings per share forecast for fiscal 2025 to $2.30, surpassing Wall Street's estimate of $2.14.

The stock has risen 20% this year and on Monday was on track for its highest close since June, according to Dow Jones Market Data.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

December 02, 2024 09:05 ET (14:05 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.