On Friday, TD Cowen exhibited caution regarding Nike 's stock (NYSE:NKE), adjusting the price target to $69.00 from the previous $73.00, while keeping a Hold rating on the shares. The firm pointed to challenges facing Nike in the competitive apparel and footwear market, noting that while the brand's positioning is under pressure, there is a clear sense of urgency from the management to address these issues. According to InvestingPro data, Nike's stock has declined 27.77% year-to-date, with 12 analysts recently revising their earnings expectations downward.
Nike's fiscal second-quarter results were acknowledged for meeting expectations, despite an 8% decline in sales, which was in line with the upper end of management's guidance. The results highlighted the tough environment the company operates in, but also showed a proactive approach from the leadership in addressing the challenges. With annual revenue of $50.01 billion and a market capitalization of $114.24 billion, Nike maintains strong fundamentals despite headwinds. InvestingPro subscribers can access detailed financial health metrics and 12 additional exclusive insights about Nike's performance.
The company's strategic actions are being expedited, particularly with the appointment of Elliott Hill as the new CEO, a Nike veteran. The firm underscored the need for Nike to undertake a significant global overhaul, both in its Direct and Wholesale operations, to improve its competitive stance and refocus on sports beyond basketball, aiming to enhance its market appeal. Despite current challenges, Nike maintains a strong dividend track record, having raised dividends for 23 consecutive years.
TD Cowen raised concerns about future earnings, suggesting that the consensus estimates for Nike's FY26 earnings per share (EPS) could potentially see a reduction of over 30%. The analyst questioned the future outlook for Nike's earnings before interest and taxes (EBIT) margin and EPS for FY27 and FY28, given the risks involved.
The report concluded with a critical perspective on Nike's valuation, questioning whether the current price-to-earnings ratio of over 30 times is justified in light of the risks and competitive dynamics the company faces.
In other recent news, Nike has been the subject of several analyst adjustments.
Truist Securities has revised its price target for Nike to $90, while maintaining a buy rating. Williams Trading has also lowered its target for Nike to $93, also keeping a buy rating. The firm has revised its earnings per share estimates for Nike, reducing FY25 EPS from $2.69 to $2.07 and FY26 EPS from $3.34 to $3.08.
KeyBanc Capital Markets maintained a Sector Weight rating on Nike, noting better-than-expected second-quarter results despite an 8% year-over-year revenue decline. Needham reaffirmed its Buy rating and $84.00 price target for Nike, adjusting the forecast for Nike's EPS to $2.00 for fiscal year 2025, $2.48 for fiscal year 2026, and $3.00 for fiscal year 2027.
BofA Securities revised its price target for Nike, lowering it to $90 from the previous $95, while reaffirming its Buy rating. The firm believes that a cleaner inventory will allow Nike to introduce new products more effectively.
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