Nike (NYSE:NKE) delivered better-than-expected Q3 Fiscal 2024 financials. While its top line exceeded the Street’s forecast, it barely moved year-over-year. Meanwhile, the company’s EPS increased 24% year-over-year and surpassed the consensus estimates. Looking ahead, the leadership of the athletic footwear, apparel, and accessories maker said that they expect NKE’s revenue to decline in the first half of Fiscal 2025 (1H 2025). This irked investors. NKE stock fell about 5.8% in Thursday’s after-hours trading.
Nike’s management expects 1H 2025 revenue to be down by low single digits. The company is strategically reducing the supply of specific flagship products to maintain demand and scale new offerings. For instance, Nike’s management expects to decrease the availability of classic items like the Air Force 1. Further, it will lower the supply of Pegasus shoes in preparation for the launch of Pegasus 41. This product management strategy will likely pose short-term challenges and hurt its top-line growth.
While the company’s management remains confident about its product management strategy, increased competition from emerging brands like On Holding (NYSE:ONON) and Hoka is affecting Nike’s market share and growth rate. With this backdrop, let’s look at how the analysts responded to NKE’s outlook.
Analysts Weigh In
TD Cowen analyst John Kernan reiterated a Hold recommendation on NKE stock after Q3 earnings. The analyst lowered the price target to $91 from $104, implying a 9.7% downside potential from current levels. Kernan sees competitive and channel headwinds for Nike stock.
On the contrary, Guggenheim analyst Robert Drbul maintained his bullish stance and again labeled Nike his “Best Idea.” Drbul perceives the recent decline in share prices as an attractive opportunity for investors to buy NKE stock. Although Drbul has lowered his revenue estimates for the first half of 2025 due to the product transition, he foresees an uptick in both sales and EPS for Fiscal 2025.
Is Nike Stock a Buy, Sell, or Hold?
Nike stock has a Moderate Buy consensus rating with 18 Buys, 9 Holds, and one Sell recommendation. NKE stock is down about 14.5% in one year. The analysts’ average price target on NKE stock of $121.59 implies a 20.60% upside potential.
