Gap (GAP) Could Be 25% Undervalued Following Its Middle East Expansion Plans

Middle East partnership puts Gap in focus

Gap (GAP) is drawing fresh attention after agreeing to partner with Dubai based Chalhoub Group to introduce Gap, Banana Republic, and Athleta across the UAE, Saudi Arabia, and Kuwait from 2026.

See our latest analysis for Gap.

Set against a year to date share price return that is down 18.74% and a 1 year total shareholder return of 6.56%, Gap’s new Middle East partnership lands while short term share price momentum has softened and the longer term three year total shareholder return of 111.10% still reflects a very strong period for holders.

If this kind of international expansion has your attention, it can also be useful to broaden your search and check out 19 top founder-led companies

Gap now has a fresh regional growth story on the table while recent share price momentum has cooled. Does it make more sense to pay today’s US$20.47, or wait and hope for a cheaper entry before the thesis is clearer?

Most Popular Narrative: 24.9% Undervalued

Gap’s most followed valuation narrative points to a fair value of $27.26 per share compared with the current $20.47 price, which sets up a clear gap between market pricing and that narrative view.

Continued improvement in cost structure (portfolio rationalization, store optimization, SG&A leverage, disciplined inventory management) and rigorous operational discipline are freeing up capital for growth investments and have supported expanded operating margins despite external pressures like tariffs, with further margin improvement expected as tariff impact is mitigated.

Read the complete narrative.

Want to see how this plays out on the calculator? The narrative leans on steady revenue gains, firmer margins and a future earnings multiple below sector levels.

Result: Fair Value of $27.26 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, Gap’s story also depends on managing tariff pressures that have already reduced earnings power and on turning around Athleta, where weak sales trends are still a drag.

Find out about the key risks to this Gap narrative.

Next Steps

If the mix of optimism and caution around Gap leaves you undecided, consider taking action while the story is still taking shape and review the full picture with 3 key rewards and 1 important warning sign

Looking for more investment ideas beyond Gap?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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