The Woolworths Group Ltd (ASX: WOW) share price was under pressure on Tuesday.
The supermarket giant's shares dropped into the red after announcing the exit of another executive.
Woolworths advised that Natalie Davis is resigning from the role of managing director of the key Australian Supermarkets business to join Ramsay Health Care Ltd (ASX: RHC).
She will be leaving in September, which is the same month that Woolworths Group CEO, Brad Banducci, is stepping down from the top job.
Should investors be concerned?
Analysts at Goldman Sachs don't believe these exits are anything to worry about. This is due partly to its confidence in Banducci's replacement. It said:
We think Ms Davis' resignation may not come as a surprise to the market, after Ms Bardwell's appointment as [Group] CEO in Feb 2024. Having headed up Woolies X, we believe that Ms Bardwell will bring the skillset and experience to drive WOW to the next level of growth.
In addition, Goldman highlights the significant talent pool in the industry. This should make it easier to find a new Australian supermarkets CEO. It adds:
Our discussions with industry participants suggests that the talent pool in more traditional supermarket retail/commercial operations is deep, suggesting options for filling the post of MD of Woolworth Supermarkets. As such we would not expect a materially negative impact to the Australian Foods business for WOW from Ms Davis' departure. In our experience, when there is a change in CEO, a cohesive approach can be more readily attained if all key leadership team are personally appointed by the CEO.
Is the Woolworths share price good value?
In light of the above, Goldman Sachs thinks that investors should be snapping up Woolworths shares now.
According to the note, the broker has reaffirmed its conviction buy rating and $40.20 price target on the company's shares. Based on the current Woolworths share price of $34.38, this implies potential market-beating upside of 17% for investors over the next 12 months.
Goldman is bullish for the following reasons:
We are Buy rated on the stock as we believe the business has among the highest consumer stickiness and loyalty among peers, and hence has strong ability to drive market share gains via its omni-channel advantage, as well as its ability to pass through any cost inflation to protect its margins, beyond market expectations. The stock is trading below its historical average (since 2018), and we see this as a value entry level for a high-quality and defensive stock.
