Why Nike Stock Slipped on Friday

Core Viewpoint - Nike's stock has faced a decline following Citigroup's downgrade to neutral, citing concerns over sales and earnings forecasts for 2026, which did not meet expectations [1][2] Group 1: Analyst Opinions - Citigroup's downgrade stems from a meeting with new CEO Elliott Hill, who indicated that Nike lacks sufficient product to meet sales targets and needs to invest in demand creation, which may negatively impact profit margins [2] - Despite Citigroup's pessimism, other investment banks, including Bernstein and Piper Sandler, remain optimistic, with Bernstein maintaining an outperform rating and Piper reiterating an overweight rating [2][3] - Analysts from Piper Sandler highlighted Nike's success in cost-cutting and grassroots marketing, while Bernstein noted that performance in key sports categories could exceed expectations, albeit with lower margins [3] Group 2: Financial Metrics and Outlook - Bernstein suggests that the risk-reward profile for Nike remains attractive, especially considering its P/E ratio of 22 compared to the S&P 500 average of 30 times earnings and a dividend yield of 2.1% [4] - However, there are concerns regarding Nike's long-term earnings growth, with most analysts projecting a subpar growth rate of 4%, and Citigroup indicating potential underperformance in growth [4]