Gap’s near-term challenges persisting, says Argus

Argus analyst Kristina Ruggeri keeps a Hold rating on Gap and states that while the company had a strong Q4 that was helped by lower costs and less discounting, the firm does not expect this outsized growth to continue. In addition to product acceptance issues and cautious consumer spending, Gap management also expects inventory disruption this year from political tensions in the Red Sea, the analyst tells investors in a research note, further noting that the stock looks “fully valued” at 17-times the firm’s expected FY25 earnings – near the high end of its five-year historical range of 10- to 18-times.