Gap (GAP) is seeing momentum at Old Navy and its namesake brand that supports its updated full-year outlook, though tariff pressure remains a risk for lower-income customers, BofA said Friday in a note.

The firm said Gap raised the low end of its fiscal 2025 sales outlook to 1.7%-2% from a prior estimate of 1%-2% and lifted its operating-margin guide to 7.2% from a prior range of 6%-7%, with tariff impact unchanged at 100-110 basis points. BofA said comparable-store sales were stronger across Gap, Old Navy and Banana Republic.

On the earnings call, Gap management spoke to a "strong start to the holiday selling season, providing confidence in the raised outlook," BofA said.

The bank said it now models 2025 and 2026 EPS of $2.14 and $2.18, and increased its price objective to $27 from $23 while maintaining a neutral rating.

Shares of the company were up nearly 5% in recent Friday trading.

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