Retail giant Gap (GPS.US) has recently received a lot of attention on Wall Street because its second-quarter results generally beat expectations, Zhitong Financial APP learned. Wells Fargo & Co was also firmly on the side of the bulls after the earnings announcement, with Ike Boruchow, an analyst at the bank, maintaining a "buy" rating of $28, suggesting the stock still has 58 per cent upside from its current trading price.

According to the data, GAP's net sales in the second quarter were $3.28 billion, down 18% from a year earlier, and the market expected $2.9 billion. It lost 17 cents per share in the second quarter, compared with a profit of 44 cents in the same period last year, and the market is expected to lose 44 cents. The whole quarter showed a rebound trend, the growth rate of e-commerce is also relatively stable, maintained at 95%.

The analyst pointed out that although the headwind of health events may continue into the second half of the year, the impact will be weaker than in the second quarter, and brick-and-mortar store operations have been normalized, and Gap sales are expected to continue to improve in the third quarter.

Although no specific guidance was given, Gap management said the company expected to go back to school for longer this year, as some retailers have called for. Management also expects its brands Old Navy and Athleta to lead revenue growth, while BR is likely to remain weak. Op-ex sales are expected to rise in the second half of the year as security measures to upgrade new stores will lead to higher store investment.

Another positive factor is that Boruchow believes that Gap will continue to benefit from its brand advantages over its competitors.

But what does all this mean for the future of Gap? Boruchow thinks maybe it's time to catch your breath. He explained that while the company's performance this quarter was strong and the outlook sounded good, given a series of good news about the stock over the past few weeks, including business upgrades and rumors about the sale of Athleta, a brief correction in the company's share price would be expected. In fact, the stock has been high for the past few months, and the market would not be surprised if there was some profit-taking.

However, this does not change the analyst's conclusion that "things are improving and stocks are still bullish". " Boruchow said that for now, Gap is still very impressive, and the second-quarter results are expected to bring a meaningful positive correction.

Of the analysts tracking the stock, three suggested buying, 12 suggested holding and one suggested selling, with a consensus rating of "hold" and an average target price of $18.20, meaning 2 per cent moderate upside from current levels.