Needham analyst Tom Nikic initiated Nike, Inc. (NYSE: NKE) with a Buy rating and a price forecast of $84.
The analyst suggests that Nike's worst may nearly be over, with the recent CEO transition from John Donohoe to Nike veteran Elliott Hill seen as a major turning point - "Nike's proverbial white knight."
The analyst also acknowledges that management accepts past mistakes and takes decisive steps to correct them.
Although these strategies may pressure profits on P&L in the short term, they are viewed as the right moves for the company, Nikic writes.
While rebuilding the brand's momentum will take time, the analyst sees potential for Nike to become an attractive "story stock" in 2025, especially if performance has hit its lowest point and investors view Elliott Hill as the company's savior.
The analyst notes that three years ago, the consensus FY25 EPS forecast for Nike was around $6.60, but it has now dropped to $2.75.
However, per Nikic, this updated estimate accurately reflects the necessary adjustments Nike needs to make.
The analyst also projects revenue declines to peak in the second half of 2024 and the first half of 2025 as Nike reduces over-distributed styles.
If revenue trends improve in the coming quarters and the EPS revision cycle turns positive, the analyst forecasts Nike's stock could start rising.
The analyst projects Nike to report FY25 revenues of $47.383 billion, with earnings per share of $2.67.
Price Action: NKE shares are trading higher by 2.52% to $76.99 at last check Friday.