Gap (GAP) is expected to see stronger earnings per share growth, driven by sustained momentum at the Gap brand, continued share repurchases and gradual improvement at Old Navy and Athleta, UBS Securities said in a note Friday.

The analysts said they see the company's growth plan coming together, while the market stays focused on Old Navy. Gap is investing in new stores, beauty and accessories, partnerships, better products and marketing, and margin expansion, while strengthening its leadership team.

The analysts added that the Gap brand delivered Q2 comparable sales growth of 10% and noted that Old Navy is struggling.

The analysts said fiscal 2026 is a transition year and expect 12% EPS growth. They forecast 23% EPS growth in fiscal 2027, up from 12% in fiscal 2026. They expect the company's initiatives to support mid-teens EPS growth over the next several years.

"Plus, Gap's stock buybacks continue to surprise. We see a very favorable upside/downside skew," according to the note.

UBS raised its price target on Gap to $42 from $40 while reiterating its buy rating.

The company's shares were up nearly 14% in Friday afternoon trading.

Price: 23.62, Change: +2.83, Percent Change: +13.59