Stifel cuts Nike shares target price on competitive pressures
Stifel, a financial services firm, has reduced its price target for Nike Inc (NYSE: NYSE:) shares from $88.00 to $79.00 while maintaining a Hold rating on the stock. The adjustment follows Stifel’s 2024 Back to School Athletic Footwear Survey, which indicates increased competitive pressures in the U.S. market.
The survey’s findings reveal that Nike is experiencing a loss in footwear market share and a decline in the relevance of its core product lines. Additionally, there appears to be a lack of market resonance with new product releases. These factors contribute to concerns about Nike’s ability to meet its mid-single-digit (MSD) revenue growth guidance for fiscal year 2025 (FY25) and the market’s expectations for a revenue growth turnaround in the fourth quarter of fiscal year 2024 (FY4Q).
In response to these challenges, Stifel has proactively lowered its forecasts for Nike’s footwear revenue and earnings potential for FY25 and FY26. The firm’s revised price target of $79.00 is based on a multiple of 24 times Nike’s projected earnings per share (EPS) of $3.30 for FY26. This is a decrease from the previous valuation, which applied a 25 times multiple to an expected FY26 EPS of $3.50.
In other recent news, Piper Sandler initiated coverage on Nike with a Neutral rating, highlighting a potential multi-year reset for the company amid strategic shifts. The firm’s analysis suggests this adjustment period may extend beyond Nike’s fiscal year 2025 guidance, with earnings per share estimates for fiscal years 2025 and 2026 coming in 8% below the consensus.
Concurrently, Nike’s stock rating was upgraded from Sell to Buy by Williams Trading, which also raised the company’s price target to $93.00. This upgrade followed the reinstatement of Tom Peddie as Vice President of Marketplace Partners, a move that has reportedly been well-received by Nike’s wholesale partners.
In addition, Pershing Square Capital Management, led by billionaire investor William Ackman, acquired approximately 3 million Nike shares. This move has led to speculation that Ackman’s presence may influence a strategic turnaround for the company. Bernstein SocGen Group maintained an Outperform rating on Nike, observing improvements in the brand’s performance metrics.
InvestingPro Insights
As Nike navigates through competitive pressures and market share concerns, real-time data from InvestingPro provides a comprehensive look at the company’s financial health. Nike’s market capitalization stands at a robust $126.02 billion, underscoring its significant presence in the industry. Despite the challenges highlighted by Stifel, Nike’s P/E ratio of 22.34 suggests a market sentiment that still values the company’s earnings potential. Moreover, the PEG ratio of 1.43 indicates that investors may be expecting earnings growth relative to the P/E ratio, which could signal optimism about Nike’s future performance.
InvestingPro Tips reveal that Nike has a longstanding history of dividend reliability, having raised its dividend for 22 consecutive years, a testament to its financial stability and commitment to shareholders. Additionally, Nike’s strong return over the last month, with a price total return of 15.84%, indicates a positive short-term investor sentiment. For those considering a deeper dive into Nike’s investment potential, there are 11 additional InvestingPro Tips available, including analysis on profitability and debt management, which can be found at https://www.investing.com/pro/NKE.
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