Nike Stock Takes Hit After Q1 Earnings: Analysts Expect Comeback To Take Time With 'Uncertain Path'

Core Viewpoint - Nike Inc's first-quarter financial results indicate that the turnaround under new CEO Elliot Hill may take longer than anticipated and face increasing challenges, as highlighted by various analysts Analyst Ratings and Price Targets - RBC Capital analyst Piral Dadhania maintained a Sector Perform rating and reduced the price target from $85 to $82 [1] - Truist analyst Joseph Civello kept a Hold rating and lowered the price target from $85 to $83 [1] - Morgan Stanley analyst Alex Straton maintained an Equal-Weight rating with a price target of $82 [1] - Stifel analyst Jim Duffy maintained a Hold rating with a price target of $79 [1] - Oppenheimer analyst Brian Nagel maintained an Outperform rating with a price target of $120 [1] Financial Performance and Market Conditions - Analysts have lowered revenue and earnings per share estimates due to soft traffic and unit sales in the first quarter [2] - The market may overlook short-term earnings challenges, focusing instead on the new CEO's strategy and product improvements [2] - New product performance is strong, particularly in the Running category, with expectations for acceleration [2] Challenges Ahead - Civello noted that the transition to new CEO Elliot Hill could lead to a "long/uncertain path" for Nike, with lower visibility into business operations than previously expected [2] - Competition from brands like On Holding and Deckers Outdoor may continue to impact Nike's market position [3] - Analysts expressed concerns that Nike's brand leverage with retail partners is diminishing, complicating the new CEO's efforts to improve the wholesale business [3] Earnings Outlook - Morgan Stanley indicated that the first-quarter earnings report provided more negative signals than positive, with a worse-than-expected Q2 outlook overshadowing the Q1 results [3] - Rising inventory levels and weaker demand could pose additional challenges for Nike [3] Strategic Direction - Straton mentioned that Nike's strategy remains unclear, especially with the postponement of its Investor Day and the new CEO's arrival [4] - Duffy noted declines in North America, EMEA, and digital segments, indicating market share losses for Nike [5] - Oppenheimer highlighted that new product innovations achieved double-digit revenue growth, with optimism around the product pipeline in running footwear and apparel [6] Stock Performance - Nike's stock has decreased by 5.73% to $84.05, with a year-to-date decline of 23% in 2024 [6]