On August 28, Gap, Inc rose 6.54% in after-hours trading, trading at $22.0617/share, with turnover of $20.49 million. The stock surged following the release of fiscal Q2 earnings that exceeded lowered market expectations.

Gap, Inc reported Q2 adjusted EPS of $0.52, beating the analyst consensus estimate of $0.48 by 8.33%, though down 8.77% from $0.57 in the year-ago period. Revenue came in at $3.651 billion, slightly missing the $3.690 billion estimate. Additionally, the company received a $95 million refund during the quarter along with $5 million in related interest income, with remaining proceeds expected in Q3.

The beat came against a backdrop of significantly reduced expectations. Multiple institutions had downgraded the stock ahead of earnings, including Jefferies cutting to Hold with a $23 target, Barclays downgrading to Equal Weight with a $20 target, and Morgan Stanley initiating at Equalweight with a $21 target. Analysts had flagged Old Navy weakness and tariff-related uncertainty as key risks. The better-than-feared results appear to have triggered a relief rally, particularly given market concerns about the pace of Old Navy's recovery following its disappointing Q1 performance.

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