On Monday, Telsey Advisory Group reiterated its Market Perform rating on Nike stock (NYSE:NKE), maintaining a price target of $80.00. According to InvestingPro data, Nike currently trades at $71.66, near its 52-week low of $68.62, with a market capitalization of $106 billion. The stock offers a 2.23% dividend yield, having maintained dividend payments for 42 consecutive years. Telsey analyst Christina Fernandez provided insights ahead of Nike’s third-quarter fiscal year 2025 earnings report, with a focus on inventory management, product innovation, and the anticipated NikeSKIMS brand launch.
Fernandez highlighted key areas of interest, including Nike’s progress on inventory reduction and the effects of shifting clearance sales to factory stores from e-commerce platforms. The analysis also pointed to the necessity for further reductions in the production of Nike’s three key lifestyle franchises: Air Jordan 1, Air Force 1, and Dunk, to align supply with demand. InvestingPro analysis shows revenue declined by 4.97% over the last twelve months, with analysts anticipating further sales decline in the current year.
The pace of product innovation is another focal point, with potential for new or retro products such as Shox and AirMax 95 to counterbalance declines in other segments. The upcoming launch of the NikeSKIMS brand is expected to expand Nike’s reach in women’s apparel.
Additionally, initial expectations for fiscal year 2026, starting in June, will be under scrutiny. With Nike’s upcoming earnings report scheduled for March 20th, InvestingPro subscribers have access to comprehensive analysis and 12 additional ProTips that could provide valuable insights into the company’s financial health and future prospects. The stock currently trades at a P/E ratio of 22.01x, and InvestingPro’s Fair Value analysis suggests the stock may be slightly undervalued at current levels. During a meet and greet with sell-side analysts in February, Nike indicated significant reductions in lifestyle franchise units, a shift towards lower-margin performance products, and efforts to enhance wholesale partnerships, which could negatively affect sales and profitability in FY26. However, these pressures might be mitigated by the reduction of heavy markdown activities experienced in FY24 and FY25.
Fernandez noted that tariffs are unlikely to have a considerable direct impact on Nike, as the majority of products manufactured in China serve the Chinese market, with only a minimal percentage imported into the United States. This contrasts with adidas and Under Armour (NYSE:UA), which reported that only 3%-4% of their China-made products are sold in the U.S.
The Market Perform rating and the 12-month price target of $80 are based on a price-to-earnings (P/E) multiple of approximately 27 times Telsey’s fiscal year 2027 earnings per share (EPS) estimate of $3.00.
In other recent news, NIKE, Inc. has secured two new credit agreements totaling $3 billion, as disclosed in a recent SEC filing. The agreements include a 364-Day Credit Facility and a Five Year Credit Facility, both facilitated by Bank of America (NYSE:BAC) and other financial institutions. These credit facilities provide NIKE with financial flexibility, allowing for borrowing in multiple currencies without financial covenants. Meanwhile, UBS analyst Jay Sole maintained a Neutral rating for Nike stock with a $73 price target, noting potential challenges in market share during a business restructuring period. Sole predicts a revenue decline of 10.3% in fiscal year 2025, followed by modest growth in the subsequent years. Jefferies, however, upgraded Nike stock to Buy, with analyst Randal Konik raising the price target to $115, citing confidence in CEO Hill’s leadership and the brand’s potential recovery. Konik forecasts a V-shaped recovery in Nike’s margins and earnings per share by fiscal year 2027. Bernstein analysts also maintained an Outperform rating with a $102 target, anticipating strong growth in Nike’s Performance footwear and apparel segments.
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