On Friday, Williams Trading adjusted its outlook on shares of Nike Inc (NYSE: NYSE:NKE), reducing the price target to $93 from the previous $97 while still endorsing the stock with a Buy rating.
The firm anticipates that Nike will face ongoing sales and margin challenges for the remainder of fiscal year 2025 due to efforts to clean up the marketplace. Despite the short-term struggles, the analyst foresees an improvement in margins and brand positioning for Nike that could propel sales growth following FY25.
The firm has revised its earnings per share (EPS) estimates for Nike, bringing down the FY25 EPS from $2.69 to $2.07. Moreover, the FY26 EPS forecast has been adjusted from $3.34 to $3.08. The analyst suggests that revenue growth is likely to resume in the second quarter of FY26, with margins expected to stabilize in the first quarter of FY26.
According to the analyst, Nike is currently focusing on transforming its Direct business into a full-price operation. Presently, half of the sales on Nike's digital platforms are at discounted prices, and traffic to Nike Direct has decreased.
This downturn is attributed to a lack of product innovation and an over-reliance on performance marketing. Consequently, this has led to the Nike brand losing its appeal and an oversupply of outdated products in the market.
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