Nike’s stock has fallen to a 13-year low, opening around $32 per share after a disappointing financial report that missed revenue expectations. Analysts are cautioning investors, with many believing the selling is not over as the company faces challenges in innovation, direct-to-consumer sales, and its critical China market.
Despite beating earnings estimates, the company projected a revenue slide for fiscal 2027 and announced further layoffs as part of a restructuring. Major investment banks like Goldman Sachs, Morgan Stanley, and Citi have expressed concerns, with several maintaining neutral or underweight ratings and price targets indicating potential further declines.
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Nike's stock is poised to open on Friday at its lowest point since 2013, following a disappointing financial report that has analysts urging caution and warning that the downward trend may not have reached its bottom.
The sportswear giant reported first-quarter earnings of 48 cents per share, surpassing the expected 43 cents. However, revenue for the period came in slightly below expectations at $11.21 billion, compared to the $11.32 billion consensus estimate. Adding to investor concerns, Nike projected a high single-digit percentage slide in revenue for fiscal year 2027 and revised its adjusted earnings per share outlook for the current fiscal year to a range of $1.15 to $1.35.
In an effort to bolster long-term growth, the company also announced further staff layoffs as part of its restructuring plan. Despite these measures, Nike shares plummeted 9% in premarket trading, signaling a bleak outlook.
The stock is now set to open around $32 per share, a level not seen in over a decade. Year-to-date, Nike shares have fallen approximately 45%, as the company grapples with a lack of innovation and broader macroeconomic challenges that have impacted its struggling business.
Analysts are expressing significant concern, noting that Nike is unlikely to see a rebound soon due to persistent pressures in its sportswear and footwear segments, coupled with a general decline in direct-to-consumer sales. The sluggish performance in the crucial China market has also heavily weighed on the stock.
"It's simply hard to find good news here," wrote Wells Fargo analyst Ike Boruchow in a note to clients. "Numbers are again coming down (~25% cut to Street EPS), growth may be two years away and valuation isn't cheap." Wells Fargo maintains an "Equal Weight" rating and a $30 price target, suggesting further downside potential.
Many analysts are awaiting Nike's investor day in November for more clarity on the company's future strategy. In the meantime, here's a snapshot of analyst sentiment:
- Goldman Sachs (Neutral, $30 Price Target): While Nike's performance business shows healthy growth, it's overshadowed by significant pressures in Sportswear, Jordan, and China. The company's restructuring actions are expected to impact FY27 and FY28, with potential margin compression due to deleveraging.
- Morgan Stanley (Underweight, $27 Price Target): Despite a better-than-expected 1Q27 EPS, the results were supported by lower-quality revenue streams. The firm anticipates further deterioration in sales and EPS growth through the second to fourth quarters, with the turnaround strategy and timeline still uncertain.
- Citi (Neutral, $32 Price Target): Nike is shifting towards a cost-cutting narrative with a $2.5 billion savings program. Management anticipates 'Pace' initiatives to impact growth starting in FY29, but analysts see no justification for a premium valuation compared to growing peers.
- Bank of America (Underperform, $24 Price Target): Visibility on a sales turnaround remains limited, and analysts see downside risk to the stock's premium multiple until a clear revenue inflection point emerges.
- Bernstein (Outperform, $45 Price Target): The guidance points to a slowdown in growth and margins as Nike manages aged inventory and adjusts its China wholesale business. While management expresses confidence, rebuilding investor credibility after multiple estimate cuts will be key.
The company's shares are down approximately 45% year-to-date, reflecting a challenging period marked by strategic missteps and a difficult economic environment.
