Nike Shares Tank After Q2 Earnings: 'Reduced Guidance Implies Ongoing Uncertainty'

Nike Inc NKE shares are tanking Friday after the company reported softer-than-expected revenue guidance for its fiscal second quarter.

The results came amid an exciting earnings season. Here are some key analyst takeaways from the Nike earnings report. 

Goldman Sachs On Nike

Analyst Brooke Roach maintained a Buy rating while reducing the price target from $139 to $135.

Nike reported an earnings beat for the fiscal second quarter, driven by margins, and “demonstrated healthy sequential improvement in profitability,” Roach said in a note.

The company also announced a significant reduction in its revenue guidance for the back half of the fiscal year to reflect “FXheadwinds, weaker consumer demand as a result of macro pressures (particularly in Greater China and EMEA), slower digital growth momentum as a result of traffic softness / higher market promotions, and a more targeted approach to key product franchise life cycle management.”

Raymond James On Nike

Analyst Rick Patel reiterated an Outperform rating while reducing the price target from $130 to $124.

Nike reported an earnings beat, despite in-line revenue, on better-than-expected gross margins and cost control, Patel said.

“While the weaker outlook is disappointing, GM % gains and Opex control are better than previously planned, which cushion the impact on FY24 EPS,” the analyst said. “Nike also announced a $2B savings initiative - most will be reinvested in revenue-driving initiatives.” 

BMO Capital Markets On Nike

Analyst Simeon Siegel reaffirmed an Outperform rating while raising the price target from $110 to $118.

Nike reported revenue growth of around 0.5% year-on-year, just missing the Street’s 0.6% forecast, Siegel said.

"NKE posted a constant currency revenue gain in China for the fifth straight quarter even as the company lapped sequentially tougher compares," he added.

“In a vacuum, we would say that post the recent rally, a brief breather makes sense for shares,” the analyst said. “However, relative to the group, NKE has actually only seen middle of the pack performance in the recent run-up, leading us to believe the weakness will be bought,” he added.

Check out other analyst stock ratings.

RBC Capital Markets On Nike

Analyst Piral Dadhania maintained an Outperform rating and $127 price target.

“The $2bn cost saving target amounts to 12% of FY24E opex, or 3% across a 3-year period,” Dadhania wrote in a note.

“Whilst not material, it is the equivalent of 50% of Nike's annual demand creation expense budget, so if redeployed effectively, could be helpful towards mid-term growth and profitability in our view,” he added.

Telsey Advisory Group On Nike

Analyst Cristina Fernández reiterated an Outperform rating and $140 price target.

“Nike struck a cautious tone regarding the global consumer on its earnings call, noting incremental macro headwinds in markets like EMEA and China and softness in the US outside of key selling periods,” Fernández said.

“These pressures together with continued tight ordering from wholesale accounts led Nike to lower its FY24 revenue growth outlook to 1% from MSD previously,” she added.

KeyBanc Capital Markets On Nike

Analyst Ashley Owens reaffirmed a Sector Weight rating. 

“NKE posted slightly softer than expected top-line results amid a difficult macro,” Owens said.

“We are encouraged by momentum in APLA but a strong 2H recovery in China looks to be out of focus due to increasing macro headwinds, and helped drive a downward revision to guidance,” the analyst wrote. “While we view gross margin expansion (+171 bps in 2Q) and announced cost initiatives ($2B in savings next three years) positively, we think reduced guidance implies ongoing uncertainty in the NT,” he added.

NKE Price Action: Shares of Nike were down 10.88% at $109.15 midday Friday. 

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