Shares of Gap (NYSE: GPS) rose by more than 7.44% in premarket trading Friday after the company reported better-than-expected FY2023 guidance.

For the fiscal fourth quarter, Gap reported an adjusted loss per share of 2c, compared to the consensus estimates of loss per share of 14c. Net sales came in at $4.5 billion, slightly above the analyst consensus of $4.49 billion.

Total comparable sales rose by 3%, short of the consensus estimates of 3.99%. Gross margin totaled 33.7% in the period, compared to the analyst expectations of 34.7%. Operating margin was 0.2%, compared to the consensus of -1.23%. The company reported a total location count of 3,399, topping the expected 3,476.

For the full-fiscal 2023, Gap expects adjusted EPS in the range of $1.85 to $2.05, topping the consensus estimates of $1.74. The company expects FY2023 revenue growth to be in the low single-digit range, and forecasts Q1 net sales down mid to high-single digits.

The operating margin is expected in the range of 6.3% to 6.8%, above the estimated 5.8%. Gap expects capital expenditure of roughly $700 million, compared to analyst expectations of $780.2 million.

“After two years of restructuring, including divesting smaller non-strategic brands, transitioning our European market to an asset-light partnership model and shedding underperforming North American stores, our core business is strong and we are poised for balanced growth across our four billion-dollar lifestyle brands," said Sonia Syngal, CEO of Gap.

Morgan Stanley analyst Kimberly Greenberger reiterated an Underweight rating and a $14.00 per share price target on GAP as she believes the company is still a “show-me” story. In particular, the analyst sees the offered guidance as too optimistic.

“We see downside risk across multiple line items to GPS’ initial 2022 guidance... We highlight overly optimistic guidance evident in the 3Q20 & 3Q21 earnings reports as well as recent questionable expenditures (e.g., $430M in 2021 air freight spend), which leaves us cautious on management’s guidance accuracy,” Greenberger wrote in a note.

JPMorgan analyst Matthew Boss raised the price target to $20.00 per share from the prior $17.00 on the Neutral-rated stock.

“Mgmt expects all 4 brands will post positive revenue growth Y/Y on an annual basis w/ Athleta/Banana Republic growth Y/Y exceeding Gap/Old Navy by our estimates,” Boss commented.