Nike has been off its stride for a while, but it’s probably time to sock up and step into the stock before the inevitable turnaround kicks in. 👟
The sportswear maker’s shares are down more than 15% this year. They are bound for more losses on Wednesday morning after Nike withdrew its outlook and warned of a weak holiday season.
A slowdown in China – Nike’s third-largest market – hasn’t helped.
But that could all be about to change as Nike welcomes back Elliott Hill as its new CEO. This is the guy who started out as an intern in 1988 and spent 30 years at Nike, before leaving in 2020. He’s expected to mend wholesale partnerships after Nike tried and failed to rely on direct sales to customers.
Deutsche Bank analysts say this past quarter is the bottom when it comes to sales. So, hello rebound?
Run up… or down?
- Analysts polled by Refinitiv suggest Nike’s shares will go up 10.8% in the next year. Deutsche Bank is even more optimistic; it’s given a $95 target, implying a 13% rise.
- Not everyone’s on board, though. Morgan Stanley is in the opposite camp, with a 12-month target of $82, down 2.4% from current levels. The bank just doesn’t think the intern/CEO’s enough to turn it round.
No pressure, Elliott.
If Hill does succeed, current share prices could be a steal. Nike stock is not that expensive compared to peers, with a forward price-to-earnings ratio near 26 times compared to 40 for Adidas and 59 for On Running ( the makers of the viral “OC” shoes with the little holes along the bottom.)
It hasn’t been an easy run for Nike this year, with sales declining 14% and lagging rivals. New Balance saw sales increase 4.9% and Adidas 1.6%. On Running saw a 30.6% jump (and everyone’s been talking about whether it’s the new Nike.)
Can the old Nike become cool again?
