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Two big-name retailers on the comeback trail just got a boost from Wall Street

  • Analysts upgraded Michael Kors and Gap and raised price targets on Tuesday.
  • Both stocks have already seen good runs in the last three months, rising 30 percent and 23 percent, respectively, and beating the 2 percent gain in the retail index.
A shopper looking at Michael Kors handbags in Macy's flagship store in New York.
Scott Mlyn | CNBC
A shopper looking at Michael Kors handbags in Macy's flagship store in New York.

Shares of two big-name retailers on the comeback trail just got upgraded by Wall Street analysts.

Oppenheimer raised its rating on Michael Kors to outperform. The firm also hiked its price target on the stock to $55, which is 23 percent higher than Monday's $44.65 closing price.

Credit Suisse upgraded upgrade Gap to neutral from underperform. Its new price target on the stock is $30, just 7 percent higher than Monday's $27.90 closing price.

Both stocks have seen some life in the last three months. Kors shares are up 30 percent since June, while Gap shares have jumped 23 percent. By comparison, the S&P Retail Index is up just 2 percent in the last three months.

Oppenheimer's report upgrading Michael Kors is headlined "Retail turnaround just starting." The note said, "Margins seem to be finding the bottom, while sentiment is extremely negative." The analysts, Anna Andreeva and Samantha Lanman, also cite improvement at Jimmy Choo, a luxury shoe company Michael Kors is buying for $1.2 billion. Just Monday, shareholders of Jimmy Choo approved the sale.

Shoppers carrying GAP bags in New York.
Carlo Allegri | Reuters
Shoppers carrying GAP bags in New York.

Credit Suisse details four reasons for its upgrade of Gap: The casual clothing chain scored better than expected in a recent analysis of its real estate assets, it recently announced the closure of 200 underperforming stores, it has improved its supply chain and the stock has "an attractive valuation."