On Tuesday, Stifel maintained a Hold rating on Nike (NYSE:NKE) shares with a consistent price target of $79.00. The firm's analysis followed the release of Nike's first-quarter financial report for fiscal year 2025, which was filed after the market closed on Monday. The report included additional insights and financial details for August 2024, supplementing the earnings report from October 1, 2024.
The recent quarter for Nike revealed weaker-than-expected revenue, a cautious outlook for the second quarter of fiscal year 2025, and the company's decision to withdraw its full-year guidance. The 10-Q filing highlighted two primary concerns: a decline in unit sales across various product categories and regions, indicating a loss of market share, and high inventory levels in China and North America, which point to significant marketplace challenges for the fiscal year 2025 in these crucial areas.
Stifel's commentary on Nike's situation suggests that calendar year 2025 may serve as a transitional period for the company. The firm anticipates that Nike's return to growth, which would support its high-twenties forward price-to-earnings (P/E) multiple, is not likely until approximately Spring 2026. Given the current lack of visibility regarding revenue stabilization or a potential inflection point, Stifel reaffirms its Hold rating and $79 price target, indicating no immediate upside from the current share levels.
In other recent news, Nike Inc (NYSE:NKE). has seen several significant developments. BMO Capital maintained an Outperform rating on Nike shares with a steady price target of $92.00, highlighting changes in unit sales and average selling prices in North America, and challenges in China.
The firm also noted declining inventory levels, except for China. Meanwhile, Adidas AG (ETR:ADSGN) reported a surge in demand for its Samba and Gazelle terrace sneakers, contributing to a projected 10% increase in third-quarter revenues to 6.4 billion euros.
In contrast, Nike faced challenges, with Piper Sandler and Truist Securities maintaining Neutral ratings on the company's shares. BofA Securities, however, maintained a Buy rating on Nike, anticipating robust sales despite an anticipated 8-10% revenue decline in the second quarter.
Piper Sandler maintained a Neutral rating on Nike with a consistent price target of $80.00, citing ongoing challenges due to the rationalization of three major franchises. BofA Securities also maintained a Buy rating on Nike with a steady price target of $100.00, forecasting a group revenue of $13.2 billion in the third quarter of 2024, a 15% year-over-year increase, and earnings per share (EPS) of $1.97, a 14% rise from the previous year.
However, Nike later withdrew its full-year guidance due to an anticipated 8-10% revenue decline in the second quarter, citing challenges in its Classics footwear segment and macroeconomic conditions. Truist Securities revised its price target for Nike to $83, maintaining a Hold rating, in light of the guidance withdrawal. These are the recent developments in the sportswear industry.
InvestingPro Insights
Recent InvestingPro data provides additional context to Stifel's analysis of Nike. The company's market capitalization stands at $121.19 billion, with a P/E ratio of 22.94, reflecting the premium valuation that Stifel noted. Nike's revenue for the last twelve months as of Q1 2025 was $50.01 billion, with a concerning revenue growth decline of -2.83% over the same period.
InvestingPro Tips highlight both strengths and challenges for Nike. On the positive side, Nike has maintained dividend payments for 41 consecutive years, demonstrating financial stability. This is particularly noteworthy given the current market challenges. However, aligning with Stifel's cautious stance, InvestingPro notes that 19 analysts have revised their earnings downwards for the upcoming period, and the stock has taken a significant hit over the last week, with a 1-week price total return of -9.31%.
These insights corroborate Stifel's view of Nike's transitional period and the potential headwinds in the near term. Investors seeking a more comprehensive analysis can access 13 additional InvestingPro Tips, offering a deeper understanding of Nike's financial health and market position.
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