NKE Slumps as Morgan Stanley Cautions on Outlook

With an economic slump either in the making or already in progress, depending on who you talk to, the end result is about the same for retailers of most stripes: bad news. For Nike (NYSE:NKE), it’s looking like a rough road ahead. At least, that’s the case from Morgan Stanley, who’s already advising caution from investors. The news was enough to send Nike down significantly in Tuesday afternoon’s trading.

The word from Morgan Stanley about Nike was somewhat good but also somewhat bad. It’s expected that Nike’s fourth quarter of 2023 report will come in about where everyone expected. There may, however, be some minor disappointments in margins thanks to higher-than-expected inventory figures. And those inventory figures will likely continue, as Morgan Stanley also looks for those issues to weigh on Nike’s forward outlook. Essentially, as Morgan Stanley analysts put it, the days for “mass sportswear” demand are over, and that will likely weigh on Nike going forward.

However, Nike may be able to stem some of these losses by shifting ground on its inventory. It’s poised to bring out some new products that may be able to help improve sales. The first is a new kind of soccer cleat that’s specifically geared toward women. Unexpectedly, cleats with a specific design for female athletes are hard to find, and Nike’s new cleat is appropriately formatted to match a woman’s overall weight, position of pressure points and ground contact, and more. Further, Nike is also taking advantage of video game hit “Fortnite”’s popularity to release an “Air-Max themed universe” known as “Airphoria.”

Meanwhile, Nike’s position with analysts is pretty sound overall. With 22 Buy ratings, three Holds, and two Sells, Nike stock is considered a Moderate Buy. Meanwhile, with an average price target of $138.64, Nike stock offers investors 26.54% upside potential.

Disclosure