Gap reports earnings Thursday after the close, with analysts expecting earnings per share of $0.48 to $0.49 on revenue of $3.7 billion.

The Gap, Inc. (GAP) — whose portfolio spans Old Navy, its largest brand by sales, alongside the namesake Gap banner, Banana Republic and Athleta — has been under pressure over the past few months. The stock fell sharply after its first-quarter results in late May, when management flagged slowing sales at Old Navy and weakness at Athleta. The company also pointed to women’s dresses as a merchandise miss. From those May highs, the stock is down double digits.

The details investors will be watching Thursday are the ones management itself flagged in May: whether Old Navy’s sales slowdown has stabilized, whether Athleta’s weakness is easing, and what the company says about the second half of the year.

Heading into Thursday’s report, however, sentiment appeared to improve. Gap jumped 6.02% to $21.36 on Tuesday, placing the stock near the midpoint of its 52-week range of $18.11 to $29.36. The shares were last quoted at $21.38, up 4.96% on the session.

Analysts are looking for the company to post earnings of $0.48 to $0.49 per share on revenue of $3.7 billion when it reports after the market close Thursday. With the stock down double digits from its May highs and expectations reset lower, the setup is less demanding than it was in May, which could work in the stock’s favor if the company delivers a clean print.

Options Market Leans Bullish

Options traders have been active ahead of the release. By early afternoon Tuesday, volume had reached 33,570 contracts, well above typical levels. Calls outpaced puts, with 20,328 calls traded versus 13,242 puts.

Most of the activity was concentrated in August 28 calls at the $23, $23.50, and $24 strikes, with about 1,500 contracts at each level. On the downside, $17 and $18 puts also saw active trading.

Open interest showed a similar pattern. The largest single position was the September 18 $24 call, with 7,448 contracts, followed by the September 4 $21 put with 6,437 contracts.

Gap’s implied volatility for the next three months was 49.57%, close to its realized 90-day volatility of 48.8%. That suggests traders are pricing in a move, but not an extreme one. The options market is effectively focusing on a move above $24 or below $18 as the main levels that could drive follow-through after earnings.

What the Analysts Say

Goldman Sachs reiterated its Buy rating on August 20 and lowered its price target to $25. The broader analyst consensus target is $25.58, based on 18 analysts tracked by Investing.com. InvestingPro’s fair value estimate for Gap is $24.62, which implies roughly 15% upside from current levels.

Even so, analyst opinion is split. Among analysts tracked by FactSet, exactly half are bullish on the stock, while the other half rate it Hold or the equivalent.

Supportive arguments include the fact that discretionary spending has held up better than expected despite higher gas prices. Gap’s delivery partnership with DoorDash could also help back-to-school sales, a stretch that along with the holiday period ranks among the most important selling windows for apparel retailers.

On the other hand, recent apparel results from Target and TJX were relatively soft, which does not create an especially strong backdrop for Gap. Its own report will add another data point on how the U.S. consumer is holding up.