Goldman Sachs has revised its outlook for Gap Inc. (GAP, Financial), reducing its price target to $25 from $34, while maintaining a Buy rating on the stock. This adjustment aligns with a broader cautious stance on the U.S. apparel and softlines sector due to potential macroeconomic challenges.
Goldman Sachs economists have also adjusted their expectations for U.S. GDP growth, now projecting a slowdown to 0.5% in 2025, down from a previous forecast of 2.5% for 2024, on a Q4-to-Q4 basis. The firm assigns a 45% probability to the likelihood of a recession occurring.
Despite not fully integrating a recession scenario into its estimates, Goldman Sachs notes that current market volatility, geopolitical uncertainties, and increased tariff rates could negatively impact earnings in the sector. These factors are contributing to the more cautious outlook on companies like Gap, as they could face headwinds in sustaining profit levels.
