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Headquartered in Beaverton, Oregon, NIKE, Inc. (NKE) is a major sports footwear and apparel company with a market cap of $111.7 billion. Renowned for its iconic "Swoosh" logo and influential marketing, NIKE boasts a strong brand portfolio, including Nike Pro, Nike Golf, and Air Jordan. The company is known for offering premium products that align with the latest customer trends.
Shares of this footwear giant have significantly underperformed the broader market over the last year. NKE has declined 34.4% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 18.5%. In 2024 alone, the stock has dipped 34.2%, compared to SPX's 8.7% gains on a YTD basis.
Narrowing the focus, NIKE’s underperformance is also evident when compared to the Consumer Discretionary Select Sector SPDR Fund (XLY). The exchange-traded fund has dropped marginally over the past year.
NKE’s underperformance compared to the broader market is fueled by weak demand for lifestyle products, struggles in its digital segment, and challenges in Europe, the Middle East, and Africa. Critics also point to a lack of focus on product innovation, and the uncertain macro environment exacerbates the issue. In China, intense competition from local brands has turned what was once a strong market into a significant drag.
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. The campaign, which features prominent athletes and coincides with the start of the Olympics in Paris, sparked optimism among investors, suggesting it could signal a branding turnaround and bolster confidence amid recent challenges.
For the current fiscal year, ending in May 2025, analysts expect NKE’s EPS to decline 21% to $3.12 on a diluted basis. The company's earnings surprise history is solid. It beat the consensus estimate in each of the last four quarters.
Among the 30 analysts covering NKE stock, the consensus rating is a “Moderate Buy.” That’s based on 14 “Strong Buy” ratings, one “Moderate Buy,” 13 “Holds,” and two “Strong Sells.”
This configuration is slightly less bullish than two months ago, with 17 analysts suggesting a "Strong Buy."
On Jul. 25, TD Cowen analyst John Kernan reduced Nike’s price target from $75 to $71 and maintained a “Hold” rating. Kernan cited policy and tariff risks, along with competitive and macroeconomic factors affecting NIKE’s China-exposed Softlines business.
The mean price target of $90.78 represents a 27.1% premium to NKE’s current price levels. The Street-high price target of $125 suggests an upside potential of 75%.
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.
