When Gap Inc. recently said June same-store sales were its first positive reading in the past 15 months, traders used the news to continue trading shares up.

Since May, shares of the retailer are up about 40 percent, and Ike Boruchow, senior analyst at Wells Fargo Securities said in a research note this morning that Gap may be turning a corner. As a result, the analyst raised his earnings estimate and price range on Gap Inc.

Boruchow said “we actually see a more favorable near-term setup on the horizon” for Gap. He noted that there are several structural hurdles that remain, which includes being overstored amid an environment suffering from “apparel deflation [and] increased fast-fashion competition.”

Still, the analyst said for the second half, investors could benefit from seeking out “a handful of contrarian names that have the opportunity to produce meaningful multiple expansion in a potential ‘rising tide’ environment.” While shares of Gap have been trading up recently, Boruchow sees room for more price growth — especially as shares of favored brands in the sectors such as Coach Inc., Ulta Beauty, TJX Cos. Inc and Ross Stores Inc., and others “are all near peak valuations.”

As a result, Boruchow raised his fiscal year earnings per share estimate to a range of $1.90 to $2.24, which is up from a prior estimate of $1.88 to $2.22. The analyst now has the stock pegged at a price range of $25 to $27, which is up from a prior range of $20 to $22. In pre-market trading, shares of Gap were up 2.5 percent to $24.95. The stock’s 52-week high is $36.74 and its low is $17.

Aside from the positive comp result in June (which was bolstered by stronger traffic across its brands), other factors informing Boruchow’s research model includes an expectation that the retailer will offer second-quarter guidance above Wall Street analysts’ consensus. The analyst also noted that Old Navy is just three months “away from lapping meaningfully easier comparisons from last year (when Stefan Larsson resigned and business turned negative).”

Larsson exited Old Navy to become ceo at Ralph Lauren Corp.

“In July, though promotional activity still appears elevated year-over-year (according to our checks), levels seem to be stabilizing (particularly at Old Navy) and increases are less extreme (particularly at Gap brand),” Boruchow noted. “Though this is hardly a strong indicator of a sustained turnaround, the positive performance gives us confidence that Gap Inc. could be in a favorable direction and may have stemmed their meaningfully decreases for now.”

The analyst maintained a “market perform” rating on the stock.