Nike Receives Investment Bank Analyst Rating Update

The stock of Nike, which has lost roughly 25% of its value in the last year, ended Friday’s trading at $92, almost unchanged from the prior close.
Specifically, Lorraine Hutchinson stated that Nike’s bottom-line forecasts “finally look achievable.”

According to Hutchinson, the company’s strategy to revitalize its operations through a focus on product creativity and streamlining its product portfolio will entail near-term challenges but carries significant ramifications for the brand’s long-term viability.

Hutchinson noted in a client communication on Thursday that this aggressive strategy resulted in a downward adjustment of projected sales for the first half of 2025, which he believes prompted an eventual adjustment to the consensus view.

Nike recently cautioned shareholders about an anticipated decline in sales as it addresses competitive pressures from emerging athletic wear labels like On Holding AG and Hoka, a label under Deckers Outdoor Corp. that has experienced substantial growth in repute. As part of its response, Nike plans to reposition its sneaker lines away from certain iconic designs, such as the Pegasus and Air Force 1s.
Specifically, Hutchinson emphasized that Nike’s bottom-line forecasts now appear attainable, marking a pivotal moment for the company. In her analysis, Hutchinson noted a noteworthy shift in consensus view for the FY25 bottom line, i.e., earnings per share (EPS), which had previously experienced a 35% decrease during the last two years. She observed stabilization in these estimates, suggesting that Nike has reached a turning point.
Moreover, Hutchinson highlighted Nike’s proactive measures toward transformation, indicating a positive trajectory for the company’s stock performance. Notably, Nike’s stock is currently experiencing a “10-year low” in comparison to its price-to-earnings (P/E) measure, presenting an opportune moment for investors.

Looking ahead, Hutchinson identified key accelerators that could further bolster Nike’s stock performance. These include the company’s forthcoming Investor Day, its first in seven years, slated for this fall, and the upcoming Summer Olympic Games scheduled to take place in Paris. Historically, Nike has gained from heightened advertising and exposure during major sporting events like the Olympics, a trend Hutchinson anticipates continuing this year.
Furthermore, she highlighted Nike’s proactive stance towards organizational restructuring, anticipating that ongoing alterations within the team and operational procedures, as outlined in the newly revealed cost-saving initiatives, could expedite sales consolidation.

Based on the above facts, while upwardly revising Nike’s rating, Lorraine Hutchinson lifted the guidance price to $113 from the previous level of $110.
The rating upgrade is expected to keep Nike’s stock slightly bullish in the short term.

Technically, the stock of Nike has formed a double bottom at $85. The next resistance is anticipated to be only near $100. Additionally, the MACD reading is showing a positive reading. Therefore, we anticipate the stock price of Nike to remain in an uptrend in the near term.