Nike Inc NKE analysts are highlighting the company’s new turnaround plan under CEO Elliott Hill with a focus on inventory, product innovation and wholesale partnerships being key takeaways Friday following the company’s second-quarter financial report.
The Nike Analysts: Telsey analyst Cristina Fernández downgraded Nike shares from Outperform to Market Perform and lowered the price target from $93 to $80.
JPMorgan analyst Matthew Boss maintained a Neutral rating and a price target of $73.
Goldman Sachs analyst Brooke Roach reiterated a Buy rating and lowered the price target from $97 to $91.
Needham analyst Tom Nikic reiterated a Buy rating and a price target of $84.
Truist analyst Joseph Civello reiterated a Buy rating and lowered the price target from $97 to $90.
Piper Sandler analyst Anna Andreeva maintained a Neutral rating and a price target of $72.
Bank of America analyst Lorraine Hutchinson reiterated a Buy rating and lowered the price target from $95 to $90.
Telsey on Nike: A turnaround path for Nike is in place, but may take longer than expected and could be costly, Fernández said in a new investor note.
The analyst said the turnaround path could require larger investments in brand marketing and hurt sales and profitability over the next year.
"In addition, we lack clarity around the length of time it will take to clean up inventory, introduce significant product newness, rebuild wholesale partnerships, and elevate Nike digital by reducing promotions in order to return Nike to growth," Fernández said.
Fernandez said there is "some early progress" with marketing and products, but things remain in the early stages.
JPMorgan on Nike: With guidance below analyst consensus, Nike could be setting up for a "crawl, walk, run setup," Boss said in a new investor note.
The phases are broken down as a crawl in fiscal year 2025 to complete the franchise lifecycle management, a walk phase in fiscal 2026 with new product innovation and run in fiscal 2027 with innovation and a look for the right partners.
"We see an elongated timeline for Nike to re-accelerate revenue growth in the midst of a franchise product lifecycle transition with the global macro backdrop further complicating the path forward," Boss said.
The analyst said the new CEO’s plan will include additional investment and wholesale discounts to get rid of excess inventory, which could result in higher promotional activity.
Goldman Sachs on Nike: The apparel company is taking immediate action under new CEO Hill, Roach said in a new investor note.
"We think the actions outlined today are the appropriate strategic moves to reset Nike to return to future growth," Roach said.
The analyst said Nike is beginning to show improvement in several areas, but inventory remains a key concern moving forward.
"We believe that the combination of a return to marketing growth, investing in the key city strategy and reestablishing partnership with wholesale partners are appropriate in the long term."
Needham on Nike: Second-quarter financial results were better than expected, Nikic said in a new investor note.
The analyst said Hill outlined the Nike vision that will be challenging in the near term.
"Climbing back up the ‘Hill' will be tough, but the path is clear," Nikic said.
Nikic added that Hill coming back to Nike is similar to a veteran athlete coming out of retirement to rescue a fallen sports team.
The analyst said Hill's commentary on re-establishing key wholesale partnerships could be encouraging for Foot Locker Inc FL, who is the company's largest wholesale partner.
Truist on Nike: Sentiment in Nike could be bottoming with the turnaround plan underway, Civello said in a new investor note.
The analyst said Hill's turnaround efforts put pressure on the second half 2025 outlook but could lead to more beat and raise guidance opportunities in the future and accelerate the timeline for a return to growth.
"We're encouraged about the team's sense of urgency and their strategic focus areas, especially improving wholesale positioning, elevating Nike's Direct business and refocusing marketing on bolder brand stories," Civello.
The analyst said Hill's decision to "rip off the Band-Aid" is great and could improve the turnaround plan.
Piper Sandler on Nike: The apparel company is in the early innings of a turnaround, Andreeva said in a new investor note.
"Doing the right things, but getting back to winning takes time," Andreeva said.
The analyst said Nike's third and fourth quarters will be hit hard for sales and profitability as the company makes room for new products and innovation.
"We view the move as necessary but also creating potentially longer-lasting lack of visibility."
Bank of America on Nike: Hill's strategy to reduce inventory to make way for new product innovation is the right Nike strategy, Hutchinson said in a new investor note.
"The anticipated reset sets the stage for a healthier Nike," Hutchinson said.
The analyst said this move will reduce profitability in the near-term while creating a "healthier business" in the long term.
NKE Price Action: Nike stock is down 0.44% to $76.75 on Friday versus a 52-week trading range of $70.75 to $123.30. Nike stock is down 29% year-to-date and has fallen 24% over the last five years.
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