‘I have done it over and over’
Nike is becoming a street favorite as more analysts join Jim Cramer to signal confidence in CEO Elliott Hill’s efforts to turn around the struggling iconic brand. Wells Fargo upgraded Nike to buy from hold on Thursday, citing increased visibility into Nike’s future. Analysts also raised their price target to $75 per share from $60; That represents a 13% update from where shares were trading Thursday afternoon. A key part of Wells Fargo’s investment thesis is Hill’s return and his plans to refocus the company on sports, revive innovation and rebuild relationships with wholesale and retail partners after his predecessor stuck with direct-to-consumer sales for too long post-Covid. Jim agrees and goes ahead of the others. “We’re in much better hands” with Hill, who came out of retirement and became CEO a little more than a year ago, Jim said during Thursday’s November Monthly Meeting for club members. He started as an intern at Nike in 1988 and rose through the ranks in numerous executive positions throughout his more than 30-year career at the company. “I spent a lot of time with Elliott Hill. He’s an athlete,” Jim said. “I think the quarter actually went well,” Jim emphasized. He said he believes Hill will continue to make progress in turning Nike around because of major global marketing opportunities such as the men’s soccer World Cup next year. “We start talking about the World Cup. That’s always been a reason to buy Nike. I’ve done it many times,” Jim said. Nike will announce its fiscal 2026 second quarter results next month. While shares rose following the Sept. 30 earnings report, they have fallen since then. Continuing its three-session winning streak, the stock is still down about 13% year to date. NKE YTD mountain Nike YTD With an uptrend similar to Bank of America’s earlier this week, Wells Fargo said the headwind in Nike’s stock has dissipated, giving the company “the potential to exit fiscal 2026 with 3-4% revenue growth.” It’s no secret that oversaturation of stocks of Nike’s classic sneakers, including Air Force 1s, Air Jordan 1s, and Dunks, has been wreaking havoc on financial charts for some time now. Wells Fargo analysts estimate that when the dust settles, “Nike will absorb a combined $6 billion of headwinds from the market clearing of these three Classics series.” But things are starting to look up for Nike. Sales outside of these legacy franchises are up more than 20%, Wells Fargo said. Nike’s revamped Vomero and Pegasus lines are driving volumes, analysts said. They also said North American margins should increase as Nike moves away from heavy wholesale discounts and prices stabilize. Nike’s own digital platform, Nike Direct, is also seeing average and full-price sales prices increase. China continues to be a problem for Nike, with sales in the region falling as consumers remain cautious about spending. Nike is still trying to clear inventory in the world’s second-largest economy, and analysts expect that will continue until mid-2026. The club has a buy-equivalent 1 rating on Nike and a price target of $80 per share. We started our Nike position on September 26 and have made three additional acquisitions since then; the most recent was on October 31. (Jim Cramer’s Charitable Trust is a long NKE. See here for a full list of stocks.) When you subscribe to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trading alert before buying or selling a stock in his charitable foundation’s portfolio. If Jim talked about a stock on CNBC TV, he would wait 72 hours after issuing the trading alert before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH THE DISCLAIMERS. NO CIVIL OBLIGATIONS OR DUTIES EXIST OR SHALL BE RESULTING FROM YOUR RECEIVING ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULT OR PROFIT CAN BE GUARANTEED.
