Nike Stock Target Lowered by Stifel Nicolaus Analyst After Q3 Earnings Report

Stifel Nicolaus's Jim Duffy lowered their price target on Nike (NYSE: NKE) by 9.3% from $129 to $117 on 2024/03/22. The analyst maintained their Strong Buy rating on the stock.

Duffy's price target move was in response to the 2024/03/21 release of Nike's Q3 2024 earnings report. The analyst summed up the print with "Q3's results topped estimates, but management's preliminary FY 2025 commentary called for 1H revenue to be down low-single digits, reflecting a reset of go-to-market strategies."

Duffy told readers that Stifel Nicolaus continues to view Nike stock as "worth a premium" because of the company's market-leading position and structural margin opportunities. Further, the analyst reported, at the company's Investor Day later this year, their firm expects Nike management to outline a "credible case" for sustainable double-digit EPS growth on modest revenue growth magnified by gross margin expansion.

For Q3 2024, Nike reported EPS of $0.98, which beat the Zacks Consensus Estimate of earnings of $0.69 but was down 3% Y/Y. Revenue came in at $12.4B, which beat the Zacks Consensus Estimate of $12.27B and was up 1% Y/Y. The gross margin improved to 44.8%, up 150 bps Y/Y. Additionally, Nike repurchased 7.9 million shares at a cost of $866 million.

Looking ahead, Nike's management provided guidance for Q4 2024 and FY 2024. For Q4, the company expects revenue to be up slightly, with a gross margin increase of 150 to 180 bps. For FY 2024, they anticipate EPS to be up Y/Y due to higher operating margins, revenue to increase Y/Y, and gross margin to improve by 120 bps Y/Y.

President & CEO John Donahoe expressed confidence in the company's direction, stating, "We are making the necessary adjustments to drive Nike's next chapter of growth. We're encouraged by the progress we've seen, as we build a multiyear cycle of new innovation, sharpen our brand storytelling, and work with our wholesale partners to elevate and grow the marketplace." CFO Matthew Friend added, "Our teams are focused on what matters most to return to strong growth. We are taking action to build a faster, more efficient Nike and maximize the impact of our new innovation cycle."

Following the release of the earnings report, several other analysts also updated their ratings and price targets for Nike:

- Piper Sandler's Abbie Zvejnieks lowered their price target by -8.4%, from $107 to $98, and maintained their Hold rating on the stock. - RBC Capital's Piral Dadhania lowered their price target by -9.1%, from $110 to $100, and downgraded their rating on the stock from Buy to Hold. - Jefferies's Randal Konik lowered their price target by -9.1%, from $110 to $100, and maintained their Hold rating on the stock.

Currently, 78.9% of top-rated analysts rate NKE as a Strong Buy or Buy, 15.8% see it as a Hold, and 5.3% either recommend or strongly recommend selling the stock.

The consensus forecast among analysts is that Nike's upcoming year will deliver earnings per share (EPS) of $3.86. If the analysts are right, NKE's next yearly EPS will be up by 11.4% on a year-over-year basis.

Since Nike's latest quarterly report on 2024/03/21, the stock price has declined by 6.9%. Year-over-year, the stock is down 21.5%. During that period, Nike is trailing the S&P 500, which is down 32.9%.

Stifel Nicolaus analyst Jim Duffy is ranked by WallStreetZen in the top 7% out of 4,521 Wall Street analysts, with an average return of 13.8% and a 62.7% win rate. They specialize in the Consumer Cyclical, Healthcare, and Technology sectors.

NIKE, Inc. sells athletic footwear, apparel, equipment, and accessories in the U.S. and internationally. It also offers products for kids. Nike was founded in 1964 and is headquartered in Beaverton, OR.

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