Nike Inc NKE shares fell sharply after dismal earnings numbers and cut guidance in its fourth-quarter report.
Some analysts are irritated with the Beaverton, Oregon-based company. Here’s what the Street is saying on Friday after going to press.
Nike Analysts: The following analysts issued notes on Friday.
- JPMorgan analyst Matthew R. Boss downgraded Nike from Overweight to Neutral, lowering the price target from $116 to $83.
- Goldman Sachs analyst Brook Roach maintained a Buy rating, lowering the price target from $120 to $105.
- Bank of America analyst Lorraine Hutchinson maintained a Buy rating, lowering the price target from $113 to $104.
- RBC Capital markets analyst Piral Dadhania maintained a Sector Perform rating with a $100 price target.
- UBS analyst Jay Sole downgraded Nike from Buy to Neutral, lowering the price target from $125 to $78
- Evercore analyst Michael Binetti maintained an outperform rating, lowering the price target from $110 to $105.
- Raymond James analyst Rick B. Patel downgraded Nike from Outperform to Market Perform.
- Telsey analyst Cristina Fernandez maintained an outperform rating, lowering the price target from $115 to $100.
- KeyBanc analyst Ashley Owens maintained a sector weight rating.
JPMorgan on Nike: The boss jokingly labeled Nike’s low estimates for fiscal 2025 as a “dog house” (a reference to the co-founder Phil Knightmemories of 2016.) Boss sees Nike as more of a long-term play.
“While NKE is the global sports market leader with diversification across all product categories, geographies and distribution, we see an extended timeline for NKE to re-accelerate revenue growth amid an exclusive product lifecycle transition against the backdrop of global macro (especially headwinds in Greater China and EMEA) further complicating the way forward,” the analyst said.
Goldman Sachs on Nike: Roach labeled Nike’s weak report “unexpected” and “disappointing,” but remains encouraged by the company’s long-term innovation.
“We are constructive on the company’s multi-year accelerated innovation cycle…,” the analyst said. “However, on the other hand, this is offset by a surprisingly large slowdown in trends in the lifestyle category, which we believe is facing high competition.”
BofA at Nike: Hutchinson is still encouraged by Nike’s continued innovation.
“NKE is facing a slowdown in lifestyle sales rather than letting inventory hold, and we think the actions announced today will help create a healthier business over the medium term,” the analyst said. “The market recovery is already underway and we are encouraged by early signs that innovation is resonating.”
Hutchinson believes Nike management’s plan to continue investing for growth is “the right decision.”
RBC at Nike: Dadhania described fiscal year 2025 as a “transition year” focused on product and innovation.
“While we value its leading market share and structural competitive advantages, and have little doubt that it will emerge stronger once these changes occur, we view its equity history and fair value as not showing enough upside for be more constructive about the name at this point. in its cycle.”
The analyst cited growth, which is unlikely to occur until calendar 2025, as a catalyst for future optimism.
UBS on Nike: Sole was discouraged by Nike’s quarterly performance.
“Nike’s 4Q report showed that its underlying trends are much worse than we had realized. Our main conclusion is that there will be no quick recovery for Nike’s earnings.”
The analyst sees the next steps as a “multi-year reset”.
Evercore at Nike: Binetti remained positive about Nike even after Thursday’s disappointment.
“We think NKE is doing many of the right things to clean up the over-inventory retro business, accelerate innovation and re-invest in the retail/consumer experience.”
Binetti compared Nike to a “big machine that will take time” amid an upcoming turnaround.
Raymond James at Nike: Patel is discouraged by the performance of global markets and other macro issues.
“We attribute Nike’s challenges to a lack of innovation already (execution errors from prior periods) and a deteriorating macro (a number of companies have highlighted a more difficult consumer backdrop, ranging from Levi’s to Walgreens to General Mills).
The analyst is not assuming Nike’s revised downward guidance is conservative given the weak performance from key business segments.
Telsey on Nike: Fernández remains bullish on Nike amid “disappointing” sales guidance.
The analyst cited increased product launches and partnerships with Dick’s Sporting Goods AND Foot locker as encouraging.
Fernández’s estimate reflects “the possibility of a brand turnaround,” now pushed back to fiscal 2026.
KeyBanc at Nike: Owens sees 2025 as a transition year amid struggles in Nike’s lifestyle brand and wholesale business. The analyst pointed to new products, innovation and brand marketing as catalysts to exceed expectations in today’s challenging macroeconomic conditions.
Price Action: Nike was trading at $75.72 at the time of writing, down 19.6% on the day.
The company is on track for its worst day since 2001.
Read further:
• Allegations of Adidas bribes lead to departure of staff in China
Photo: pixfly on Shutterstock