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The first shipments of Gap’s Yeezy collection are expected this fall.
Getty Images/Cindy Ord
It’s been a year since Gap announced its partnership with music tycoon Kanye West, which sent the company’s stock skyrocketing. Today,
Wells Fargo & Company
Yeezy’s collection at the mall staple still has a lot of potential, according to him. In a Wednesday note, analyst Ike Boruchow confirmed his Overweight rating and $40 price target on Gap (ticker: GPS), stating that a sight of the partnership earlier this month strengthened his optimism ahead of the first shipments this fall.
Other shops have benefited from West’s presence, but it’s unclear how much more income he can bring to Gap. The analyst polled 1,000 consumers to get a sense of how potent the collaboration could be, and the findings indicated to significant upcoming sales. According to Boruchow, 64% of existing Gap customers (a little more than half of those polled) stated they planned to buy a piece from the Yeezy collection in the first year, spending an average of $178. 23 percent of non-Gap customers said they planned to buy a Yeezy, demonstrating West’s ability to lure new buyers to the brand. And three-quarters of new buyers said they planned to buy normal Gap merchandise as well. Boruchow was ecstatic about the sales boost Gap may expect when the collection opens, based on the results: He estimates that Yeezy might boost profits by 50 cents per share this year and as much as $1.50 per share by fiscal 2026. Given whatever “brand halo” that Yeezy imparts to Gap, as witnessed by other firms West has associated with, like as Adidas, those statistics might be even higher, he adds (ADDYY). Boruchow is also optimistic about his $2.60 earnings-per-share forecast for fiscal 2022, which is the highest on Wall Street. After the Covid-19 epidemic, Boruchow was the first analyst to upgrade Gap stock, boosting it in June 2020, only days before the Yeezy announcement. In midday trading, Gap was up 1.6 percent to $33.09. The stock has risen 64.5 percent so far this year and 166.4 percent in the last year. Teresa Rivas can be reached at teresa.rivas@barrons.com./n
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