Truist Securities analyst Joseph Civello upgraded Nike, Inc.
The analyst writes that while he still sees the turnaround process as lengthy and uncertain, he is more optimistic about the stock as investor expectations now seem more realistic.
In particular, the analyst attributes Nike's recent struggles to its heavy focus on DTC growth since 2020, which has stifled innovation and caused customer fatigue with key products, making its current franchise management strategy necessary.
Exiting retail partnerships also resulted in share losses to competitors like ONON and HOKA, which will be difficult to regain, adds the analyst.
With experienced company leadership back in charge, the analyst believes that they are steering in the right direction.
Civello sees the rehiring of 30-year veteran Tom Peddie and the appointment of incoming CEO Elliot Hill, with his strong experience in marketplace and marketing, as key steps in driving the turnaround.
Although a full recovery is a long-term goal, near-term wins-like increased marketing investment, improved wholesale relationships, and promoting ambassador Caitlin Clark should help demonstrate to investors that better times are ahead, adds the analyst.
Civello maintained EPS estimates at $2.75 for 2025 and $3.10 for 2026.
This month, the athletic footwear and apparel company reported first-quarter revenue of $11.59 billion, missing analyst estimates of $11.65 billion and EPS of 70 cents per share, beating analyst estimates of 52 cents per share.
Investors can gain exposure to the stock via First Trust Dow 30 Equal Weight ETF
Price Action: NKE shares are down 0.27% at $82.23 at the last check Thursday.
