Two analysts have withdrawn their recommendation to buy GAP stock. Is the “Barbie magic” not working?

Two Wall Street analysts have simultaneously stopped recommending that investors buy shares of the clothing manufacturer GAP. Consumers are losing interest in its Old Navy brand, and the company is trying to win them back with ever-increasing discounts, according to investment bank reports. Three years ago, Richard Discone, a former Mattel executive known for bringing the Barbie brand to the big screen, took the helm at GAP. In his new role, he was also expected to work his “Barbie magic.”

Jefferies and Barclays downgraded their recommendations on GAP shares—the owner of the flagship brand of the same name, as well as Old Navy, Banana Republic, and Athleta—almost simultaneously. Previously, analysts at these banks had recommended buying the company’s stock; now they suggest holding it in the portfolio without increasing or decreasing the position.

Analysts have also revised their price targets for GAP stock. Jefferies lowered its target to $23, which implies upside potential of 13.6% relative to the stock’s closing price on August 12. Barclays’ new target is $20 and does not imply any further rise in the stock price.

“We are increasingly concerned about Old Navy’s weakening position; the data points to an increase in promotional activities,” wrote analysts at Jefferies, as reported by the Proactive portal. For the first fiscal quarter, which ended on May 2, the brand’s comparable sales rose by just 1%; only Athleta fared worse, with a decline of 11%. GAP will release its second-quarter results on August 27.

Results from a Morning Consult survey showed that interest in purchasing Old Navy products in July fell by 13% year-over-year and continues to decline, while perceptions of the products' value have worsened, according to Jefferies.

Analysts at Barclays make similar points. “Old Navy continues to run frequent promotions, those at Banana Republic have become more extensive, and Athleta remains a drag on the company, with no clear prospect of improvement,” according to a note cited by CNBC. At the same time, Barclays notes the positive momentum of the GAP brand but believes this is not enough to support the company’s stock.

Interestingly, both investment banks recommended buying GAP stock at the same time— following the strong quarterly results reported in November.

In recent years, GAP has faced a decline in revenue and comparable sales. The company has cut jobs, closed stores, and tried to speed up the development of new styles—it has lost ground to both global chains such as Zara and online retailers such as Shein, according to The Wall Street Journal.

To remedy the situation, in August 2023, the retailer appointed Richard Dickson—a former executive at Mattel, which manufactures toys under the Barbie, Hot Wheels, and Fisher-Price brands—as CEO. While GAP announced this decision, a movie about Barbie—for which Dixon served as executive producer—was in full swing in theaters. In its press release, GAP called him one of the leading architects of Mattel’s global transformation, which breathed new life into its brands and put the company back on a growth trajectory. This led many to speculate that he would try to recreate the “magic of Barbie” at GAP, the New York Times reported.

Since the beginning of 2026, GAP's stock has fallen by nearly 21%.

Wall Street opinions on the company's prospects are divided: its stock has 11 "buy" ratings and an equal number of "hold" ratings. A month ago, there were 14 "buy" recommendations.

The average target price for GAP shares is $26, which is 28% higher than the most recent closing price.