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Based in Beaverton, Oregon, NIKE, Inc. (NKE) is a global leader in the athletic footwear, apparel, and equipment industry. Valued at a market cap of $122 billion, NIKE's product range includes six key categories: running, basketball, the Jordan brand, football, training, and sportswear.
Companies worth $10 billion or more are generally considered "large-cap" stocks, and NIKE exemplifies this category, implying its significant size, stability, and dominance in the athletic apparel and footwear industry.
NIKE is recognized as one of the strongest brands in the sportswear industry, with its iconic "Swoosh" logo and "Just Do It" slogan contributing significantly to its global presence and revenue. The company boasts a vast distribution network, ensuring worldwide access to its products. Beyond the main Nike brand, its diverse portfolio includes Converse and various sub-brands like Nike Shox and Nike Blazers, allowing it to adapt to changing consumer preferences.
Despite its notable strengths, NKE shares are trading 34.5% below their 52-week high of $123.39, which they hit on Dec. 20, 2023. NKE stock declined 14.3% over the last three months compared to the 5.7% rise seen in the Consumer Discretionary Select Sector SPDR Fund (XLY) during the same period.
Over the longer term, NKE shares have declined 25.6% on a YTD basis and 19.4% over the past 52 weeks. In comparison, the XLY has surged 4.7% in 2024 and gained 10.2% over the past year.
To confirm the bearish price trend, NKE has been trading below its 20-day for the past couple of trading sessions and under its 200-day moving average since late February.
Despite higher prices, NIKE has consistently grown its business over the years. However, recent concerns about slowing growth and inflation have led to investor worries, causing a steep decline in stock prices.
Moreover, on Aug. 28, NIKE shares fell 2.9%, influenced by Foot Locker Inc.'s (FL) Q2 earnings report, which, despite beating sales and earnings expectations, announced plans to close stores in Asia and Europe. Foot Locker’s projected reduction of 140 stores in Asia and 629 in Europe raises concerns for NIKE, as the retailer remains a key partner.
However, the stock jumped nearly 3% on Jul. 22 after NIKE launched its new "Winning Isn't for Everyone" ad campaign for the 2024 Summer Olympic Games, featuring high-profile athletes.
Highlighting the contrast in performance, NKE's competitor, Adidas AG (ADDYY), has significantly outperformed NKE and the Consumer Cyclical sector with a gain of 25.8% over the last 52 weeks and 21.3% on a YTD basis.
Despite the recent weak price performance, analysts hold a cautiously optimistic view of NKE's prospects. The stock has a consensus rating of "Moderate Buy" from 31 analysts in coverage. The mean price target of $89.31 reflects a 10.5% premium over current levels.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
