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Valued at a market cap of $113.5 billion, NIKE, Inc. (NKE) is a global leader in athletic footwear, apparel, equipment, and accessories, known for its iconic brands like Nike, Air Jordan, and Converse. Based in Beaverton, Oregon, the company reaches consumers worldwide through retail stores, digital platforms, and partnerships with top athletes and sports teams.
Shares of the athletic apparel maker have underperformed the broader market over the past 52 weeks. NKE has dipped 23.2% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 21.8%. In addition, shares of NKE are up 1.1% on a YTD basis, compared to SPX’s 2.7% gain.
Focusing more closely, NIKE has lagged behind the Consumer Discretionary Select Sector SPDR Fund’s (XLY) nearly 32% return over the past 52 weeks and a 2.8% YTD gain.
Despite reporting better-than-expected Q2 EPS of $0.78 and revenue of $12.4 billion on Dec. 19, NIKE's shares fell marginally the following day. Revenue declined 8% year-over-year, driven by lower retail traffic and weak market trends, particularly in September and October. Additionally, the company experienced a 21% drop in NIKE Brand Digital sales and a 3% decline in wholesale revenues. NIKE also projected a low double-digit revenue decline and a significant gross margin drop for Q3, which raised concerns.
For the current fiscal year, ending in May 2025, analysts expect NKE’s EPS to decline 48.1% year-over-year to $2.05. However, the company's earnings surprise history is promising. It topped the consensus estimates in the last four quarters.
Among the 33 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on 16 “Strong Buy” ratings, one “Moderate Buy,” 14 “Holds,” and two “Strong Sells.”
This configuration is more bullish than three months ago, with 14 “Strong Buy” ratings on the stock.
On Dec. 21, 2024, UBS lowered its price target on Nike to $73, maintaining a “Neutral” rating due to concerns over potential bad news in the coming quarters.
As of writing, NKE is trading below the mean price target of $84.27. The Street-high price target of $120 implies a potential upside of 58.6% from the current price levels.
