Nike Stock Climbs as Wall Street Analysts Welcome a CEO Change

Nike's (NKE) hard-hit shares rallied Friday, topping the Dow's advancers, as Wall Street analysts largely welcomed the company's appointment of veteran executive Elliott Hill as its new Chief Executive Officer (CEO).

Hill, who had spent 32 years at the firm and retired in 2020, was last head of the company's consumer and marketplace division. He will replace John Donahoe, who departs after almost five years as CEO.

Shares of Nike were up about 6% in recent trading, leaving them down roughly 20% for the year.

Jefferies Notes Nike's Headwinds, Such as Rising Competition, Distribution Changes

Jefferies analysts said investors cheered the news of Hill's appointment, marking a vote of confidence for the executive. But they also noted that Hill is facing challenges after his four years away, such as “rising competition and changes in distribution, brand building, and product.”

Hill, who starts his new role on Oct. 14, returns to a company that has seen its stock tumble as it struggled to compete against upstarts like Hoka.

In June, Nike reported disappointing fiscal fourth-quarter results and warned of changes to its outlook. Donohoe, who started at the role as the pandemic struck, had shifted a lot of Nike's sales online and away from long-time retail partners—a strategy that hurt the brand once people were shopping in person again.

Jefferies maintained its hold rating on the stock, The analysts said they expect shares to stay range-bound until the company gives a clearer view of its strategy when it holds an analyst day on Nov. 19.

Bank of America Sees Hill's Appointment as Boding Well for Brand's Shakeup

Bank of America's Lorraine Hutchinson stuck with a buy rating on Nike, noting that she thinks Hill's appointment “is the first step forward to accelerate the turnaround” at the company.

Hutchinson said she believes “this is the right time for a shakeup,” saying Hill’s long previous tenure with Nike “bodes well for the effort to rejuvenate innovation, rekindle wholesale relationships, and rebuild sales."

Wall Street's mean analyst price target on Nike's shares is just over $89. The shares recently traded a bit under $87.