On Wednesday, Barclays shifted its stance on JD (NASDAQ:JD) Sports Fashion plc (LSE:JD) (OTC: JDDSF) stock, downgrading from Equalweight to Underweight. This revision also comes with a price target adjustment to GBP1.10 from the previous GBP1.40. The decision follows the recent downgrade of Nike (NYSE:NKE) by another analyst at the firm due to increased uncertainty surrounding the brand's turnaround.
The downgrade reflects concerns over the impact of Nike's performance on JD Sports. After Nike's fourth-quarter earnings report, the perceived risk associated with the sportswear giant has influenced Barclays' outlook on JD Sports. The firm cited the potential for downside risks to materialize, which prompted the reassessment of JD Sports' stock rating.
Barclays had previously indicated that a more positive view of JD Sports might be warranted if the company demonstrated consistent delivery against expectations or if Nike's product innovations were resonating strongly with consumers. However, the recent developments with Nike have raised doubts about the brand's long-term health, particularly given the emergence of strong competitors in the market.
The reassessment by Barclays comes at a time when the sportswear retailer is facing a critical period, with the performance of key partners like Nike being integral to its success. The revised price target of 110p reflects the new level of caution Barclays advises regarding JD Sports' shares in the near term.
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