In the near term, Konic sees easier comps ahead in the next several quarters as well.
Inventory levels fell 4 percent in Q3, and the company’s plan to keep inventory levels tight should also boost margins. In addition, Konic estimates that the Gap’s target of $275 million in cost savings in fiscal 2018 will add another 2 percent to margins.
While other analysts are lowering price targets for the stock, Jefferies has upped its target from $32 to $36.
Despite Friday’s selloff, Gap stock remains up 4.7 percent in 2016. At last check, Gap shares were down 16.51 percent at $25.64.