The firm raised its rating on the stock to overweight from equal weight.
Investors should get off the sidelines on Gap given the retailer's potential for business improvement, according to Barclays. Analyst Adrienne Yih upgraded the retailer to overweight from equal weight. Her $13 price target implies shares could rally 26.2% from Monday's close.
More specifically, she said the headwind from cotton and input cost inflation can turn into a tailwind in the second half of this year, while lean inventory can offset some impacts from ongoing promotions. And that follows a positive sales-to-inventory inflection in the first quarter of 2023, she noted. Despite the opportunity to recapture some of the margin, Yih noted the company can do more work to stabilize the business and make it more malleable to consumer demand signals.
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