Although Gap Inc (NYSE:GAP) reported its fourth-quarter results slightly below expectations, management indicated that Phase 2 of the company's long-term transformation would begin in 2026, according to JPMorgan.

The Gap Analyst: Analyst Matthew Boss reiterated an Overweight rating, while reducing the price target from $36 to $33.

The Gap Thesis: The company reported earnings of 45 cents per share on 2.1% revenue growth, missing consensus estimates of 46 cents per share on 2.3% revenue growth, Boss said in the note.

Check out other analyst stock ratings.

Management guided 2026 net sales growth of 2%-3% and earnings of $2.20-$2.35 per share, broadly in line with Street expectations, the analyst stated.

Gap projected first-quarter sales growth of 1%-2% year-on-year, with implied comps of 2.5%-3.5% above Street expectations of 2.8%, he added.

Management indicated that Phase 2 of CEO Richard Dickson's roadmap. The initiative, dubbed "Build Momentum," focuses mainly on the retailer “growing the core apparel business through better product, marketing, and storytelling.”

GAP Price Action: Shares of Gap had declined by 12.65% to $23.76 at the time of publication on Friday.

Image: Shutterstock