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Nike (NKE+5.07%) stock jumped more than 5% after Jefferies (JEF-0.34%) gave the company a rave review, saying that CEO Elliott Hill is tackling production and distribution head-on and that it expects a “V-shaped” rebound in profit margin and earnings per share in the 2027 financial year.
Analysts, led by Randal Konik, made the stock a top pick, raising their recommendation to “buy” from hold and boosting their price target to $115 from $75. They estimate EPS of $3.50 — compared with consensus for $2.95 — in the fiscal year through May 2027, up from a projected $2.08 in the year through May 2025.
Nike had a really rough 2024: sales fell around the world, shares dropped 60% from a 2021 high point, and the company’s relationship with major retailers was damaged.
“Nike’s brand remains very strong, proving that issues were self-inflicted and competitive threats less severe,” the analysts wrote. While the company has lost market share due to strategic missteps, including reduce product innovation, it should be able to stabilize its share of the athletic footwear market at the low- to mid-20% range, they said.
Hill has “prioritized restoring wholesale partnerships and driving innovation,” a playbook that worked a decade ago. This should accelerate unit volumes and allow the company to sell more shoes at full price.
As part of its rebound push, Nike this month said it’s working with Kim Kardashian on NikeSkims, a shoe and athletic wear range aimed at women. The company recorded more than $8.5 billion in revenue generated from female apparel in its fiscal year 2024, less than half the $20.8 billion it made off of male apparel.
It marks the first time that Nike has ever joined with an existing, outside firm to launch a brand.