Shares of Nike, Inc. fell about 7 percent on October 2 as its subpar first-quarter results and guidance heightened investor concerns that a return to healthy growth might only happen in calendar year 2026.
SGB Media spoke with eleven Wall Street analysts (see commentary below) to explore Nike’s turnaround prospects. Several remain bullish on Elliot Hill’s return as CEO.
Shares of Nike fell $6.03, or 6.8 percent, on Wednesday to $83.10, with the company’s stock trading much closer to the 52-week low of $70.75 than the 52-week high of $123.39. Shares remain up about 3 percent since news arrived on October 19 on the company hiring Nike veteran Hill as CEO, effective October 14.
Hill retired from Nike in 2020 while president of the company’s consumer and marketplace division. Analysts generally agree that Hill’s experience at Nike, product innovation and go-to-market strategies provide more confidence that he can revive Nike’s growth than the retiring CEO and President John Donahue. Before becoming CEO in early 2000, Donahue held leadership roles at ServiceNow, eBay and Bain & Co.
Regardless, several analysts adjusted their Nike EPS estimates downward following the quarterly analyst call, citing cautious comments and guidance from management.
Double-digit declines in North America, the EMEA and digital seen in the fiscal first quarter, which ended August 31, showed that Nike continues to lose market share to competitors. Other signs Nike’s business worsened in the quarter were management’s move to guide earnings in the fiscal second quarter to 60 cents a share, down from consensus estimates of 82 cents, and its forecast that gross margins would decline this fiscal year versus increasing previously due to planned promotions to clear elevated inventories.
Other signals raising investor concerns in the quarter included continued weakness in Nike’s three classic franchises—Air Force 1, Dunk and Air Jordan, a softening wholesale business marked by spring orders coming in slightly below target and the company’s decision to withdraw full-year guidance in light of the CEO transition. Nike also postponed an Investor Day scheduled for November that could have been a catalyst if Hill provided a compelling story on Nike’s turnaround strategy.
At Jefferies, analyst Randy Konik reiterated his “Hold” rating following earnings results at a price target of $85. He wrote, “F1Q results show that share losses have grown, particularly in running, where mgmt has acknowledged losing share. We believe On, Hoka, New Balance, and Adidas will continue to innovate and gain shelf space as NKE attempts to reinvigorate demand. We would note that while NKE has faced competition before, this situation differs from when only Adidas was its main competitor.”
Konik also noted that gross margin gains will lessen as Nike intends to become more promotional amid a challenging consumer environment, but he also suspects many investors will stay on the sidelines until they hear about the new CEO’s plans.
Williams Trading reiterated its “Buy” rating at a $97 price target following earnings results. Analyst Sam Poser is bullish that Hill’s positive impact on Nike’s internal culture may accelerate the turnaround. He wrote, “Upon the hiring of 32-year Nike veteran Elliot Hill as Nike’s new CEO, the needed combination of art and science, and talent empowerment is returning to Nike, replacing the Bain of consultant driven top-down approach which resulted in terrible morale, a curtailing of innovation, and in the end loss of talent, due to, what should have been unnecessary, cost-cutting initiatives.”
Poser believes that under Hill’s leadership, Nike could commercialize existing innovations faster than in recent years. Poser also sees Hill helping with recruitment, including incentivizing retired Nike talent to return to help guide the recovery.
At wholesale, Poser heard that Nike is returning to sell products at Shoe Show following the company’s return to DSW and Macy’s in late 2023. In conversations with several of Nike’s large U.S. wholesale accounts, Poser found “far more productive strategy discussions are underway with retailers.” Poser stated, “We recognize we are early, but there’s light at the end of the tunnel. We continue to believe that noticeable positive change will be evident within 15-18 months.”
CFRA analyst Zach Warring reiterated his “Hold” position on Nike at an $89 price target. Just before Nike released earnings, he had reduced his rating from “Buy” to reflect a more cautious stance due to increased competition and a perceived lack of growth drivers for Nike. Warring said in his post-earnings report, “Demand creation expense increased 15 percent due to investment in key sports events. We believe shares are fairly valued, trading above 25x analyst EPS estimates for FY 25.”
RBC Capital Markets maintained its “Sector Perform” rating on Nike while trimming its price target to $82 from $85. The firm also lowered its revenue and EPS estimates for FY25 by 3 percent and 8 percent, respectively.
Piral Dadhania said 1Q25 results confirm that Nike’s product pivot will likely take longer than expected. The analyst said, “The market likely looks through some of the near-term earnings headwinds, with focus on the new CEO strategy, improving product offer and Performance focus. Execution risk and fuller valuation balance our view to Sector Perform.”
At Barclays, Adrienne Yih kept her “Neutral” rating on Nike while lowering her price target to $81 from $84. Yin also reduced her sales and margin outlook for the remaining quarters of this year.
Yi reported that there’s not “much evidence” that Nike’s innovation pipeline will revive sales over the next six to twelve months. She noted, “We do not expect a return to annual guidance until we enter FY26, at which point Mr. Hill will have had sufficient time in the CEO seat to provide an outlook. We remain on the sidelines as we believe that the current state of the company’s business decline implies ongoing uncertainty and downward pressure on both sales and profits.“
Stifel’s Jim Duffy kept his “Hold“ rating at a price target of $79 but reduced his earnings and sales targets for FY25 and FY26. “We agree with management comments that ‘a comeback of this scale takes time.‘” said Duffy. “Recent stock action, however, seemingly speculates otherwise. With a new CEO assuming the role in two weeks, we expect a return to growth sufficient to justify the high-twenties forward P/E multiple unlikely until 1HCY26 at the earliest. Absent improved visibility to revenue inflection, we can’t support an upside case from current share levels and remain comfortable at HOLD.“
John Kernan, at TD Cowen, reduced his EPS estimates on Nike by 11 percent for FY25 and 5 percent for FY26. He kept his “Hold“ rating, but raised his price target to $78 from $71 to reflect improved investor sentiment tied to the CEO change. Kernan said while he liked the Hill hiring, strong competition in footwear and apparel “is likely to lead to a prolonged turnaround.“ Kernan pointed out that Adidas’ reset could be a long process. He wrote, “Our coverage of Adidas gave us a front-row seat to a sizable cultural, strategic and go-to-market shifts in Bjorn Gulden’s CEO tenure, which required a significant reset of the company’s EBIT margin and earnings expectations.”
Bank of America reiterated its “Buy“ rating while trimming its price objective to $100 from $104 and its EPS estimates over the next three years. Analyst Lorraine Hutchinson believes the quarter’s reset to even lower expectations “tempers the risk of a sales miss and gives incoming CEO Hill flexibility to implement his strategy.” Hutchinson said that while online growth remains challenging and Nike’s pullback on key franchise styles is expected to continue impacting results for the rest of the fiscal year, she is encouraged by the company’s continued refocus on wholesale, its plan to advance innovation and “early signs of success in key focus areas like running.“
At Baird Equity Research, Jonathan Komp reduced his EPS estimates for the current fiscal year and FY26 but kept his “Outperform“ rating at a $100 price target on optimism that Hill will be able to steer a multi-year earnings recovery. Komp said, “While we look forward to hearing from NKE’s new leader, the company believes doubling down on performance innovation, especially in key categories (running which returned to growth, basketball) will be key to elevating the marketplace and recapturing share. NKE also plans to invest in re-engaging key partners to improve across categories and price points.”
Cristina Fernández, at Telsey Advisory Group, maintained her “Outperform“ rating but downwardly revised her price target to $96 from $100 and sales and earnings estimates over the next two years. She wrote, “Demand for Nike products has weakened further in recent months and Nike called out softer than expected sales during the back-to-school season and lower pre-orders for Spring 2025, which came in flat vs. expectations for growth.”
Fernández added that ongoing moves to reduce the availability of its three major lifestyle franchises, which include Air Force 1, Dunk and Air Jordan 1, weaker guidance for Q2 and margins in the year, the CEO transition, withdrawn full-year guidance and postponed investor meeting all create doubt for investors. Fernández wrote, “Together, these actions create greater uncertainty about the financial path for Nike over the next two to three years and could weigh on the stock near-term.”
Paul Lejuez, at Citi Research, maintained his “Buy“ rating at a $102 price target while lowering his EPS estimates due to weaker sales and gross margin guidance; however, Lejuez said Nike is seeing “green shoots“ in performance running, but the underperformance of classic franchises he expects will linger longer than expected. He wants to hear updates on product strategy, leadership/talent hires, Jordan brand direction, and other areas when Hill first addresses Wall Street on the December second-quarter analyst call. Lejuez said, “We believe investors will give new leadership time to assess the biz as market expectations move toward [about] $2.50 in F25 EPS (vs prior cons $3.06) and an extensive brand recovery is pushed out to F26. Near-term positive catalysts are limited, but mgmt change and some early wins with running innovation increase our confidence that the Nike brand will be in a better place 12-months from now vs today.”
Image courtesy Nike
