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Can Nike and Target Sustain Recent Momentum?
ZACKSยท2025-07-25 00:11

Core Insights - NIKE (NKE) and Target (TGT) have experienced significant underperformance in recent years, regularly posting weaker-than-expected results and facing inventory issues, particularly with Target's discretionary merchandise post-COVID [1][8][13] - Both companies have seen a rebound in stock prices over the past three months, raising questions about whether these stocks can recover [2][6] - Despite recent positive commentary, the near-term EPS outlook for both companies remains bearish, with analysts suggesting that investors may be better off waiting for positive revisions [7][11][14] NIKE (NKE) Summary - NIKE's recent quarterly results showed sales of $11.1 billion, a 12% decrease year-over-year, with gross margin contracting to 40.3% from 44.7% in the same period last year [3] - The company has faced challenges in capturing consumer demand, contributing to its struggles, although there is optimism that headwinds may moderate in the future [4][6] - Analysts remain bearish on NIKE's EPS outlook, with downward revisions following the latest earnings release [4][11][14] Target (TGT) Summary - Target's comparable store sales decreased by 5.7% year-over-year in its latest period, reflecting ongoing challenges with its discretionary inventory [8] - However, Target's digital sales grew by 4.7% year-over-year, and same-day delivery through Target Circle 360 increased by 36%, indicating strength in its digital efforts [9] - Similar to NIKE, analysts have a bearish outlook on Target's EPS, with widespread downward revisions noted [11][14]