RBC downgrades this apparel company on worries its turnaround will take longer than expected
Nike’s turnaround under CEO Elliott Hill is making progress but progress is “slower and narrower than we were anticipating,” and that view is impacting its outlook for the stock, according to RBC. The bank downgraded its rating on the stock to sector perform from outperform. It also cut its price target to $50, which represents a 12% gain from Tuesday’s close. Shares of Nike are down more than 70% since their late 2021 highs. However, they’re also down under Hill — by 45% — who came out of retirement to help right the ship of the company. NKE mountain 2024-10-13 Nike since Elliott Hill as CEO. Analyst Piral Dadhania said Nike is seeing visible improvements, but the breadth across products is limited. The company is also fighting the risk of losing market share in some of those products, he said. “Nike Lifestyle Footwear offer remains market leading however On Running, Hoka and New Balance price lead in Running Footwear. Vuori, Alo Yoga and Lululemon occupy premium price positioning in Women’s Apparel,” Dadhania wrote in a Wednesday note. In Nike’s earnings report due on June 30, Dadhania thinks the company could beat estimates due to FIFA World Cup-related sales. However, he doesn’t expect to see improvements in the company’s direct-to-consumer business. In his new estimates, Dadhania cut his earnings per share outlook for Nike, citing weaker revenue growth and profit recovery. “Execution speed is not as quick as we would like on product and inventory clearance, with the remainder of cal-2026 unlikely to deliver positive revenue growth,” Dadhania wrote.
