By Sabela Ojea
Shares of Nike became the best performer in the S&P 500 after Jefferies raised its recommendation on the stock to buy from hold, citing Chief Executive Elliott Hill's strategy to reposition the sportswear brand after years of missteps.
The stock was up 5.3% to $80.58 on Monday, on pace for the highest close since Oct. 22, 2024. Shares are up 6.4% year to date, and have fallen 23% over the past 12 months.
The athletic footwear and apparel company's strategic issues, including reduced product innovation and overemphasis on its digital business, allowed competitors to take market share. However, Hill has the right playbook to turn things around as he prioritizes restoring wholesale partnerships, Jefferies analyst Randy Konik said in a research note.
The introduction of the new brand NikeSKIMS, announced last week, is set to revolutionize the activewear market, Konik added.
"As channel inventories rebalance along with improved product direction and execution we believe a substantial earnings recovery will ensue over the coming two years," Konik said.
Jefferies, which last downgraded Nike to hold from buy in September 2023, sees an upside of near 20% to the Street's earnings-per-share estimates for fiscal 2027.
Write to Sabela Ojea at sabela.ojea@wsj.com
(END) Dow Jones Newswires
February 24, 2025 11:58 ET (16:58 GMT)
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