Nike Stock Falls On Guidance, Turnaround Plan: Analysts See 'Buying Opportunity,' But Caution 'These Strategies Will Take Time'

Shares of apparel and footwear company Nike Inc NKE are trading lower Friday morning after the company reported third-quarter financial results that beat Street estimates.

Here's a look at what analysts are saying about the results and the company's future.

The Nike Analysts:

• Telsey analyst Cristina Fernandez has an Outperform rating and lowers the price target from $120 to $115.
• Goldman Sachs analyst Brooke Roach has a Buy rating and lowers the price target from $135 to $120.
• Citigroup analyst Paul Lejuez has a Buy rating and $125 price target.
• JPMorgan analyst Matthew Boss has an Overweight rating and $122 price target.
• RBC Capital analyst Piral Dadhania downgrades shares from Outperform to Sector Perform and lowers the price target from $110 to $100.
• Truist analyst Joseph Civello has a Hold rating and lowers the price target from $111 to $99.

Related Link: How To Earn $500 A Month From Nike Stock After Upbeat Q3 Earnings

Telsey on Nike: A changing strategy could be coming for Nike to bring back growth, Fernandez said in an investor note.

"Nike is adapting its strategy as it looks to reinvigorate brand heat with a focus on four areas," Fernandez said.

The four areas are innovation, increasing focus on sports, reducing inventory and improving the brand's wholesale presence.

"While these seem to be the right steps, the transition will negatively impact sales and profitability in 1H25."

The analyst sees the slowdown in Nike's stock as temporary and expects a future return to growth.

Goldman Sachs on Nike: A reset to growth for Nike in the first half of 2025 comes alongside the potential for margin expansion at the company, Roach said.

"We are encouraged by the company's discussion regarding an acceleration in its multiyear innovation cycle with a pull-forward of new product that will be married with sport-focused storytelling, beginning with the Olympics," Roach said.

The analyst maintains a constructive outlook on Nike, citing comments on life cycle of products, alongside macroeconomic concerns and declines in the China region.

"We continue to believe the path for near-term NKE growth remains choppy and lower our estimates to reflect the tougher near-term growth outlook as we look into FY25."

Citi on Nike: The apparel company is set for an "innovation pivot," which could bring some near-term pain for the stock, Lejuez said.

"The 3Q sales/eps beat will take backstage to mgmt's announced plans to pivot the product assortment and its impact on F25," Lejuez said.

The analyst said Nike management sees sales growth and margins expanding in fiscal year 2025. Lejuez said Nike announced it is working on fixing its "lack of innovation" in recent years.

"This focus on innovation (and profitability) should be viewed positively even though it comes with managing down some franchises to lower sales volumes near-term."

Lejuez sees the weakness in Nike stock "as a buying opportunity."

JPMorgan on Nike: Margins for the apparel company and a focus on innovation are highlighted by Boss in an investor note.

"Management cited increased macro volatility, which has driven an elevated promotional backdrop & therefore softer traffic notably within digital," Boss said.

The analyst highlighted Nike's focus on increasing investment in wholesale channels.

Boss said one of the keys from Nike was comments on margins with a focus on expansion and managing costs.

RBC on Nike: Shares of the apparel company are downgraded by Dadhania with "little to play for" in 2024.

The analyst said no revenue growth in the first half of fiscal 2025 was implied by the company.

"Organizational restructuring & product transition over the next few quarters add further uncertainty and guidance risk in our view," Dadhania said.

The analyst said Nike "will emerge on the other side a better company," but sees current momentum and weak guidance hurting the stock in the short-term.

Truist on Nike: A return to growth for Nike could take time, Civello said.

"While we are positive on the steps Nike is taking (focusing on innovation constraining supply of key products & re-engaging more with the wholesale channel), we believe these strategies will take time and don't expect the company to easily regain share," Civello said.

The analyst said they are cautious on Nike until there is "better visibility" for top-line growth.

A focus on wholesale and partner management comes as competitors and "younger-brands" taking market share, the analyst notes.

NKE Price Action: Nike shares are down 8% to $92.11 on Friday versus a 52-week trading range of $88.66 to $128.68.

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