Nike's Worst May Nearly Be Over: Analyst Sees CEO Transition And Strategic Fixes Sparking A Turnaround

Core Viewpoint - Needham analyst Tom Nikic initiated coverage on Nike, Inc. with a Buy rating and a price target of $84, indicating optimism about the company's future following a significant leadership change [1] Group 1: Leadership Transition - The recent CEO transition from John Donohoe to Elliott Hill is viewed as a pivotal moment for Nike, with Hill being referred to as "Nike's proverbial white knight" [1] - Management's acknowledgment of past mistakes and their decisive corrective actions are seen as positive steps for the company [1] Group 2: Financial Projections - Although short-term profit pressures are expected due to strategic adjustments, these moves are considered necessary for long-term brand rebuilding [2] - The consensus FY25 EPS forecast for Nike has significantly decreased from approximately $6.60 three years ago to $2.75 currently, reflecting the adjustments needed [2][3] - Nikic projects FY25 revenues for Nike to be $47.383 billion, with an EPS of $2.67 [4] Group 3: Market Outlook - Revenue declines are anticipated to peak in the second half of 2024 and the first half of 2025 as Nike reduces over-distributed styles [3] - If revenue trends improve and the EPS revision cycle turns positive, there is potential for Nike's stock to start rising [3]