Citi analysts reaffirmed their Buy rating and $32 price target on Gap (NYSE:GPS), anticipating a significant second-quarter earnings beat. The analysts forecast earnings per share (EPS) of $0.50, surpassing the Street estimate of $0.41.

The analysts expect management to raise full-year 2024 sales and implied EPS guidance from approximately $1.60 to over $1.70, reflecting the projected Q2 beat. They anticipate that Q3 guidance will remain relatively in line with current estimates at $0.59, maintaining a conservative approach.

Looking ahead, Citi foresees further sales and EPS growth in 2024, driven by stronger performance from Old Navy and Gap, disciplined expense management, and continued gross margin expansion. The analysts highlight the opportunity for Gap to reduce promotions across all brands in the second half of 2024, providing further upside even as product cost tailwinds diminish.