Analysts revisit Nike stock price targets after major CEO shakeup

Nike shares powered firmly higher in early Friday trading as analysts and investors reacted to the sportswear giant's move to interchange CEO John Donahoe.

Nike (NKE) , which has lost around $45 billion in market value this year, is currently trading where it changed into previous to the Covid-19 pandemic in 2020 and is one amongst the weakest five-year performers within the Dow Jones Industrial Average.

The corporate has been tormented by both a pullback in consumer spending in China, a key growth market, intense competition from European rival Adidas (ADDYY) and missteps tied to a give attention to its direct-to-consumer business over traditional retailers and wholesalers.

The group launched a $2 billion cost-cutting plan last year aimed at boosting underlying profit margins and reviving moribund store sales, but didn't capitalize on a summer of high-profile sporting events, including the Paris Olympics and the Euro 2024 soccer championships.

Nike forecasts a double-digit slump in overall revenue for its current fiscal year, which began in June, against Wall Boulevard's consensus estimate of a 1% gain, in what it generally called a "transition year for our business."

The group received some support for its turnaround last month, because the billionaire investor Bill Ackman's Pershing Square Capital Management hedge fund unveiled a stake of around three million shares, but many analysts saw the activist's stake as leverage to do away with Donahoe as CEO.

Nike's 'next stage of growth'

Late Thursday, Nike said Donahoe would step down next month, with the previous Nike executive and 30-year company veteran Elliott Hill succeeding him on Oct. 15.

“I am excited to welcome Elliott back to Nike," said group chairman Mark Parker.

"Given our needs for the future, the past performance of the business, and after conducting a thoughtful succession process, the board concluded it changed into clear Elliott’s global expertise, leadership style, and deep understanding of our industry and partners, paired with his passion for sport, our brands, products, consumers, athletes, and employees, make him the suitable person to guide Nike’s next stage of growth,” he added.

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Wells Fargo analyst Kate Fitzsimons, who lifted her price target on the group by $9 to $ninety five a share following last night's update, said Hill's return can be a "key catalyst that bulls have been taking a look ahead to and can assist drive a new narrative for the company."

Baird analyst Jonathan Komp, who raised his price target $10 to $a hundred and ten a share, said Hill's appointment would likely have a much bigger impact on Nike's longer-term earnings prospects along with to the stock's six- to 12-month outlook.

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Hill's uphill battle

Deutsche Bank analyst Krisztina Katai said Hill's return to Nike as CEO "increases our confidence in Nike’s ability to get back to sustained growth."

"This leadership change, which changed into highly anticipated, will likely bring a renewed give attention to product innovation, marketing, and rebuilding wholesale partnerships —areas that had been challenged under previous leadership," said Katai.

She carries a 'buy' rating with a $Ninety two price target on Nike stock beforehand of its Investor Day presentation on Nov. 19.

Related: Analysts overhaul Nike stock price targets after earnings

"Hill’s strong internal and retail partner relationships should provide a direct morale boost," she added. "While Nike’s fundamentals remain weak, we agree with they're going to be largely disregarded within the near term."

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KeyBanc Capital Markets analyst Ashley Owens, who carries a 'sector weight' rating on the stock, said Hill's "longstanding connection with the company and expertise within the promoting scope is encouraging, as Nike examines reinvigorating brand storytelling."

"We think the timing of a leadership change changed into relatively within expectations, and note Nike is taking swift actions one day of its broader restructuring initiative," she added.

Nike shares were marked Eight.four% higher in premarket trading to denote an opening bell price of $87.Seventy 9 each and each.

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