After a rough couple of years, the latest numbers from Gap Inc GPS 1.1% suggest the company may be on the brink of a turnaround. According to Jefferies analyst Randal Konik, Gap investors now have more reasons to be bullish than bearish.

After meeting with company management, Konik now sees multiple positives in place for Gap, including cash flow improvement, Old Navy’s fast fashion exposure, Gap’s enduring market presence and a number of near-term, value-enhancing strategic initiatives.

According to Konik, Jefferies is anticipating upward earnings revisions in coming months.

“We view risk/reward attractive here, with momentum at Old Navy and stabilization at Gap offsetting challenges at Banana Republic, the multiple near trough levels, and cash flow inflecting,” he explained.

Konik added that management was particularly optimistic about Old Navy, which accounts for about 42 percent of the company’s sales.

For Gap, management believes Kids licenses with Walt Disney Co DIS 0.51%, Marvel and Star Wars could be traffic drivers headed into the holiday season.

The company has also launched…

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