NIKE (NYSE:NKE) Reaches New 1-Year Low After Analyst Downgrade

Key Points

• NIKE shares fell to a new 52-week low of $35.16 after RBC cut its price target from $45 to $40 while maintaining a sector perform rating.
• Analyst sentiment remains cautious, with a consensus “Hold” rating and an average price target of $46.62; several firms cited weak China demand, retailer pullbacks, competition and promotional pressure.
• NIKE’s turnaround efforts—including a China strategy overhaul and new product launches—could support longer-term recovery, but near-term earnings expectations imply year-over-year declines in revenue and EPS. The company also maintains a quarterly dividend of $0.41 per share, yielding about 4.6%.

NIKE, Inc. (NYSE:NKE - Get Free Report)'s share price hit a new 52-week low during trading on Wednesday after Royal Bank Of Canada lowered their price target on the stock from $45.00 to $40.00. Royal Bank Of Canada currently has a sector perform rating on the stock. NIKE traded as low as $35.16 and last traded at $35.2840, with a volume of 25289716 shares trading hands. The stock had previously closed at $35.84.

Several other research analysts also recently weighed in on the company. Needham & Company LLC reiterated a "hold" rating on shares of NIKE in a research note on Thursday, June 4th. Rothschild & Co Redburn dropped their target price on shares of NIKE from $45.00 to $37.00 and set a "sell" rating for the company in a report on Friday, July 17th. Telsey Advisory Group set a $44.00 price target on NIKE and gave the stock a "market perform" rating in a research note on Tuesday, September 15th. Zacks Research raised NIKE from a "strong sell" rating to a "hold" rating in a research note on Wednesday, August 19th. Finally, JPMorgan Chase & Co. reiterated a "sell" rating on shares of NIKE in a report on Monday, August 31st. One research analyst has rated the stock with a Strong Buy rating, nine have given a Buy rating, twenty-one have given a Hold rating and seven have assigned a Sell rating to the stock. According to data from MarketBeat, the stock currently has a consensus rating of "Hold" and an average price target of $46.62.

Insider Activity at NIKE

In other news, insider Amy Montagne sold 4,867 shares of the stock in a transaction dated Friday, August 7th. The shares were sold at an average price of $42.05, for a total transaction of $204,657.35. Following the transaction, the insider directly owned 57,436 shares in the company, valued at $2,415,183.80. This represents a 7.81% decrease in their position. The sale was disclosed in a legal filing with the SEC, which is available at this link. Also, CFO Matthew Friend sold 2,463 shares of the company's stock in a transaction that occurred on Wednesday, August 5th. The stock was sold at an average price of $41.60, for a total transaction of $102,460.80. Following the transaction, the chief financial officer directly owned 82,165 shares of the company's stock, valued at $3,418,064. This trade represents a 2.91% decrease in their position. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. In the last quarter, insiders sold 14,974 shares of company stock worth $600,126. 1.10% of the stock is owned by insiders.

NIKE News Roundup

Here are the key news stories impacting NIKE this week:

• Positive Sentiment: Jefferies expects NIKE to potentially beat first-quarter expectations, citing stabilizing North American and wholesale trends, better inventory levels and earlier gross-margin improvement. The November investor day could provide another turnaround catalyst. Nike set for Q1 beat as margins improve, Jefferies says
• Positive Sentiment: Short interest has reached an estimated 87 million shares, worth about $1.4 billion in paper profits for short sellers. A results beat or more constructive guidance could force short covering and create upside volatility. NKE short interest and potential earnings squeeze
• Neutral Sentiment: NIKE is overhauling its China strategy to reduce discounting and rebuild its premium positioning, while new footwear launches and the “Sport Offense” plan aim to restore product momentum. These initiatives may help longer term but have yet to demonstrate a material near-term recovery. Nike China strategy overhaul
• Negative Sentiment: Options traders expect limited relief from the earnings report. Consensus calls for approximately $0.44 in EPS on $11.34 billion of revenue, implying year-over-year declines in both measures. Nike earnings expectations and options outlook
• Negative Sentiment: Several analysts have lowered price targets, including RBC to $40 and Piper Sandler to $38, citing weak China demand, retailer order pullbacks, heavy competition and a promotional selling environment. Wall Street also expects conservative guidance, increasing downside risk if management does not provide evidence of acceleration. Analyst views on Nike’s turnaround

Institutional Inflows and Outflows

A number of hedge funds and other institutional investors have recently added to or reduced their stakes in the company. J. Stern & Co. LLP lifted its stake in shares of NIKE by 49,010.4% in the 4th quarter. J. Stern & Co. LLP now owns 48,054,542 shares of the footwear maker's stock valued at $3,061,555,000 after purchasing an additional 47,956,692 shares in the last quarter. Flossbach Von Storch SE purchased a new position in NIKE in the second quarter valued at approximately $488,714,000. Capital World Investors raised its holdings in NIKE by 16.2% in the fourth quarter. Capital World Investors now owns 49,069,951 shares of the footwear maker's stock valued at $3,126,246,000 after buying an additional 6,830,938 shares during the period. State Street Corp lifted its position in NIKE by 6.8% during the second quarter. State Street Corp now owns 63,598,789 shares of the footwear maker's stock valued at $2,636,104,000 after buying an additional 4,052,428 shares in the last quarter. Finally, Capital International Investors grew its stake in NIKE by 83.3% during the fourth quarter. Capital International Investors now owns 7,642,382 shares of the footwear maker's stock worth $486,895,000 after buying an additional 3,472,515 shares during the period. Institutional investors and hedge funds own 64.25% of the company's stock.

NIKE Trading Down 1.2%

The firm's 50 day simple moving average is $39.29 and its 200-day simple moving average is $43.20. The company has a market capitalization of $52.55 billion, a PE ratio of 16.95, a P/E/G ratio of 2.03 and a beta of 1.10. The company has a quick ratio of 1.36, a current ratio of 1.96 and a debt-to-equity ratio of 0.40.

NIKE (NYSE:NKE - Get Free Report) last posted its earnings results on Tuesday, June 30th. The footwear maker reported $0.20 earnings per share for the quarter, beating the consensus estimate of $0.11 by $0.09. NIKE had a net margin of 6.70% and a return on equity of 16.54%. The business had revenue of $10.97 billion for the quarter, compared to analyst estimates of $10.85 billion. During the same quarter in the previous year, the business posted $0.14 EPS. The business's quarterly revenue was down 1.1% on a year-over-year basis. As a group, equities research analysts anticipate that NIKE, Inc. will post 1.65 EPS for the current year.

NIKE Announces Dividend

The business also recently disclosed a quarterly dividend, which will be paid on Thursday, October 1st. Shareholders of record on Tuesday, September 1st will be paid a dividend of $0.41 per share. This represents a $1.64 dividend on an annualized basis and a dividend yield of 4.6%. The ex-dividend date is Tuesday, September 1st. NIKE's payout ratio is currently 78.47%.

NIKE Company Profile

NIKE, Inc is a global sportswear company that designs, develops, markets and sells athletic footwear, apparel, equipment, accessories and related services. Its products are marketed under the NIKE, Jordan and Converse brands and are used across a broad range of sports and lifestyle activities, including running, basketball, football, training and outdoor pursuits.

The company distributes its products through a combination of wholesale partners, NIKE-owned retail stores and digital platforms.

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