Nike's Price Target Lowered by Morgan Stanley Analyst After Q3 Earnings Report

Morgan Stanley's Alex Straton lowered their price target on Nike (NYSE: NKE) by 6.5% from $124 to $116 on 2024/03/27. The analyst maintained their Strong Buy rating on the stock.

The price target adjustment came following Nike's Q3 2024 earnings report, which was released on March 21, 2024. Straton cited weaker Q4 sales gross margin guidance from management as the reason for cutting their Q4 revenue and EPS estimates. The analyst's firm now forecasts an EPS of $0.80 for Q4 2024, compared to the previously implied guidance of $0.77 to $0.78 and Morgan Stanley's earlier estimate of $0.91.

Nike's Q3 2024 earnings report showed mixed results. The company reported an EPS of $0.98, beating the Zacks Consensus Estimate of $0.69, but down 3% year-over-year. Revenue for the quarter came in at $12.4 billion, surpassing the Zacks Consensus Estimate of $12.27 billion, and marking a 1% increase year-over-year. Nike also reported a gross margin of 44.8%, up 150 basis points year-over-year. Additionally, the company repurchased 7.9 million shares at a cost of $866 million.

Looking ahead, Nike's management provided guidance for Q4 2024 and the full fiscal year. For Q4, the company expects slight revenue growth and a gross margin increase of 150 to 180 basis points. For the full fiscal year 2024, Nike anticipates higher EPS due to improved operating margins, revenue growth, and a gross margin increase of 120 basis points.

Despite the price target adjustment, Straton's Strong Buy rating on Nike suggests optimism about the company's future performance. This sentiment is echoed by other analysts, as 78.9% of top-rated analysts currently rate NKE as a Strong Buy or Buy, while 15.8% see it as a Hold. Only 5.3% of analysts recommend or strongly recommend selling the stock.

The consensus forecast among analysts is that Nike will deliver earnings per share (EPS) of $3.81 for the upcoming year. If this forecast proves accurate, it would represent a 9.8% increase in EPS on a year-over-year basis.

In terms of stock performance, Nike's share price has declined by 8.2% since the release of its Q3 2024 earnings report on March 21, 2024. On a year-over-year basis, the stock is down 21.4%. During this period, Nike has underperformed the S&P 500, which is down 32%.

Alex Straton, the Morgan Stanley analyst responsible for the recent price target adjustment, is ranked in the top 17% out of 4,527 Wall Street analysts by WallStreetZen. Straton specializes in the Consumer Cyclical sector and has an average return of 9.9% with a win rate of 58.1%.

NIKE, Inc., founded in 1964 and headquartered in Beaverton, OR, is a prominent athletic footwear, apparel, equipment, and accessories manufacturer. The company operates both in the United States and internationally, offering a wide range of products for athletes of all ages.

Want to get in touch? Email us at news@wallstreetzen.com.

WallStreetZen and Don Francis do not hold any positions in the companies mentioned in this article. The information and statistics provided herein are presented for general informational purposes only and may not be accurate, complete, or up-to-date. It should not be interpreted as a recommendation to buy or sell any stocks and should not be solely relied upon for making investment decisions. It does not take into account your financial situation or risk profile. All investors should conduct their own investment due diligence before buying a stock. WallStreetZen expressly disclaims any liability for the accuracy, reliability, or completeness of the analysts' information, price targets, ratings, or opinions.