Nike CEO is stepping down, and some on Wall Street appear lukewarm on the news. After the bell on Thursday, the sneaker giant announced that CEO John Donahoe would retire on Oct. 13. Elliott Hill, who worked at the company for 32 years before retiring in 2020, will take over the next day. While UBS sees the move as positive for the stock in the near term, adding that Hill has the potential to put Nike back on a growth path, the firm warns that any upward momentum may already be running out. “With this catalyst now behind us, we expect the market’s focus to shift to Nike’s fundamentals and its earnings call on Oct. 1,” analyst Jay Sole wrote in a note to clients Thursday. “We think sentiment could turn more bearish as the market realizes that Nike’s fundamentals are likely not great … and that there is likely no silver bullet to Nike’s problems.” Sole kept his Neutral rating on the stock and set a $78 price target, implying a downside of more than 3% from Thursday’s close. This year, Nike shares have already plunged about 20%. NKE YTD mountain NKE, year-to-date Morgan Stanley called the change “unsurprising” given that there is still a “big hill ahead” for the company. The investment firm believes a cut to Nike’s full-year guidance is now likely when it next reports first-quarter fiscal 2025 earnings. If the estimates are cut, analyst Alex Straton speculates that the stock’s positive but “somewhat muted” reaction to the change could fade as investors grapple with the possibility that the company’s fundamentals will deteriorate before improving over the next year. Straton has an Equal Weight rating on the stock, with a $79 price target, down more than 2% from Thursday’s close. Others, however, have become more bullish on Nike after the decision. Wells Fargo maintained its Overweight rating and raised its target from $9 to $95, implying more than 17% upside ahead. “We expect multiple expansion commensurate with Hill’s hire – as leadership has been a big point of contention and controversy around the stock,” analyst Ike Boruchow wrote in a note. “Additionally, green shoots in the wholesale business have emerged (including positive comments from the likes of DKS, FL, ASO and JD Sports) as it can be argued that the majority of the bad news in the story is largely behind us at this point. With the CEO change announced, the bulls are now gaining visibility.” » Bank of America also maintained its buy rating, calling it a first step toward turning around the company. Bernstein, who has an outperform rating on Nike, expects the turnaround to “take time,” but said market sentiment will be supportive. Their targets imply an upside of more than 28% and 34%, respectively, by Thursday’s close. “There’s still much to do, including making a slow design process more agile, reestablishing feedback loops to understand changing consumer tastes, and eliminating obsolete products to make way for new innovation,” Bernstein analyst Aneesha Sherman wrote in a note Thursday. “But we think the market will be more forgiving of a slow and steady pace of change if it has confidence in a good leader.”
