Analysts from Jefferies highlight staff changes at Nike Inc (NYSE:NKE) and improving industry trends mixed with better strategic decisions for Abercrombie & Fitch Co. (NYSE:ANF) as catalysts for their bullish ratings.

Nike Inc

Analyst Edward Plank of Jefferies weighed in on Nike after rumors the company hired competitor Under Armour’s top footwear designer, Dave Dombrow. The designer is best known for creating UA’s popular Stephen Curry basketball sneaker as well as contributing to the company’s running business products. The analyst believes Nike made the right move by hiring Dombrow. He states, “In what’s become an increasingly competitive category, securing top talent away from a competitor is a big tactical win for Nike, in our view, particularly given the traction UA’s footwear business has gotten over the last couple of years (up 94% in 4Q15 and 57% for the year).”

The analyst believes Dombrow will “infuse fresh perspective” into Nike’s slowing basketball business, where current styles are underperforming related to previous versions. The analyst believes that UA losing a key designer will shake up its recent upward momentum. While UA has a strong pipeline in the short term, the analyst will be watching for how it manages its footwear design leadership going forward.

The analyst reiterates his Buy rating on NKE and $76 price target, citing several strengths displayed by the company. Plank states, “Valuation is reasonable in our view, given NKE’s strength and market dominance, as well as margin enhancing opportunities in DTC, apparel and new manufacturing technologies.” He continues, “In addition to our confidence in the innovation cycle and Nike’s competitive separation, our outlook on the stock’s performance is bolstered by the company’s top-notch execution, cash flow power, above-average shareholder returns, and multiple tiers of growth across geographies.”

According to TipRanks, Edward Plank has a 40% success rate recommending stocks with an average loss of (8.8%) per recommendation. Out of the 17 analysts who have rated the company in the past 3 months, 16 gave a Buy rating while 1 remains on the sidelines. The average 12-month price target for the stock is $78,63, marking a 21% upside from current levels.

Abercrombie & Fitch Co.

Analyst Randal Konik of Jefferies commented on Abercrombie and Fitch following his firm’s field research, making the company one of his top franchise picks. He highlights improving industry trends, better organization, and potentially higher EPS as catalysts for the stock. The analyst points to rising AUR trends which should contribute positively to the stock long term. He notes a decade long struggle of teen retailers, such as ANF, resulting from price deflation, competitors, a lighter focus on brand names, and shifting fashion tastes. The analyst states, “Our work now shows AUR trends in the teen space have reached a trough, implying a more stable op margin environment.” He also believes FX headwinds will not heavily affect the company in FY17 as they did in the last year, as 35% of sales are international.

The analyst notes higher brand demand, with rising comps for its Hollister division and “comps only down slightly” for the A&F brand. As a result, the analyst predicts an additional .30-.40 in EPS in the next few years. Konik also points to organizational improvements implemented by the company, stating, “Over the last few years, ANF has streamlined costs, reduced unproductive real estate, and improved supply chain efficiencies.” He notes that “capex has moderated,” which allocates more FCF to repurchase shares which will reduce share count by 40% since the company’s 1996 IPO.

Although the company’s op margins and EPS are down 80% and 75%, respectively, from peak levels, the analyst believes these metrics have the potential to “explode higher.” Plank states, “We estimate every 100 bps of margin improvement equates to $0.35 of incremental EPS. With op margins at 4% and EPS just above $1, we think both metrics may near triple within the next 3-4 years.”

The analyst reiterates a Buy rating on the company and raises his price target to $50 from $40. He explains, “Improving industry trends combined with an upward sales trajectory, lower cost structure, trough margins, & reduced share count imply that ANF’s nascent EPS recovery is just beginning.” Randal Konik has a 43% success rate recommending stocks with an average loss of (1.2%) per recommendation.

According to TipRanks, only 2 other analysts rated the company in the past 3 months, both remaining on the sidelines. The average 12-month price target for the stock is $30, marking a 7% downside from current levels .