Nike Stock price drops to an all-time low as some analysts

Nike Stock price drops to an all-time low as some analysts question the company’s leadership following a negative outlook. According to Stifel analysts, “management credibility is seriously challenged and the possibility of a C-level regime change adds further uncertainty.”Following the sneaker manufacturer’s gloomy outlook on Friday, Nike Inc. shares ended Friday with their biggest decline ever. Some Wall Street analysts even questioned the company’s management. Shares of Nike (NKE) fell 20% at the end of regular trading after receiving several downgrades from institutions including UBS, Morgan Stanley, and Stifel. Nike experienced its largest one-day percentage decline in history during the selloff.

In a research note published on Thursday, Jim Duffy, an analyst at Stifel, stated that Nike was putting investors’ trust in the company’s leadership at risk by requesting them to put their faith in newer, unproven sneaker and apparel styles in the face of shaky demand.

“Management credibility is severely challenged and potential for C-level regime change adds further uncertainty,” he stated.

In an effort to combat consumers’ reluctance due to inflation, Nike intends to introduce a wide range of new products more quickly. However, analyst Jay Sole at UBS had his own misgivings about the business and lowered his projected earnings per share for the company’s next three fiscal years. Sole stated in a research note on Friday, “Our main conclusion is there will be no quick rebound for Nike’s earnings.” “We believe Nike is embarking on what will be a multiyear reset of its business in order to return to healthy top-line growth rates.” He continued: “Our base case top-line forecast depends on Nike successfully developing new innovative products, but there is no guarantee this will happen.”

John Donahoe, the CEO of nike stock, stated during a conference call on Thursday to discuss the company’s fourth-quarter results that strong gains in performance products were more than offset by declines in the lifestyle segment. He went on to say that those decreases had “a pronounced impact” on Nike’s online performance “These factors when combined with increased macro uncertainty and worsening foreign exchange have caused us to reduce our guidance for [fiscal-year] 2025,” Donahoe stated “Wedbush analyst Tom Nikic wrote a note released on Friday that stated, ‘NKE’s 4Q24 print was very choppy, and the challenges facing the company are clearly more impactful than we (or management) expected. “After the company missed Q4 sales and meaningfully cut FY25 guidance, shares are likely to open meaningfully lower on Friday.”

Related: In an effort to boost demand, Nike plans to release more new trainers and sell fewer vintage ones.

“We doubt many investors will view this as a ‘buy the pullback’ event, and we think NKE shares are headed for a stay in the proverbial penalty box until new product innovations actually start to manifest themselves and management regains investor trust,” Nikic stated. “We remain at Outperform due to our expectation that NKE will eventually ‘figure it out,’ but our conviction in our thesis has certainly taken a hit.” Wedbush reduced its $115 price target for Nike to $97.

According to analysts, Nike is about to go through a transitional phase.

According to a note released on Friday by Raymond James analyst Rick B. Patel, “FY25 will be a transitional year with significantly softer performance than we anticipated and what NKE planned three months ago.” Patel specifically mentioned a decline in lifestyle products, deteriorating global macro headwinds, and a hit to foreign exchange.

Related: There’s a growing demand for looser fits at Levi’s. What it means for Nike and Lululemon is as follows.

“One may argue that Nike kitchen-sinked FY25, but given the increasingly difficult macro, we don’t have confidence on upside to revenue (most critical factor),” Patel continued, citing numerous reports of softening consumer demand from companies like Levi Strauss & Co. (LEVI), Walgreens Boots Alliance Inc. (WBA), and General Mills Inc. (GIS). The analyst also mentioned China’s volatility and an unfavourable channel mix. Nike was downgraded from outperform to market-perform by Raymond James.

Ashley Owens, an analyst at KeyBanc Capital Markets, predicts that 2025 will be a transitional year for Nike as the company works through issues including balancing its wholesale and direct-to-consumer channels, starting new product innovation initiatives, investing in brand marketing, and letting go of top franchises for life-cycle management.

“We think the above dynamics coupled with a challenging macro will continue to pressure results for the next couple of quarters,” she stated.

Owens did draw attention to Nike’s new “Speed Lane” priority, which aims to double the company’s business contribution from new products by the end of the 2025 fiscal year.

“Additionally, NKE noted headcount actions are complete, and looks to other areas for savings, planning to reallocate $1B to invest in consumer-facing activities in FY25 to help support top line,” said the analyst. “Though channel-mix shift and franchise [management] will challenge the next few quarters, we think balancing product offerings, channels, and price points could help NKE be more competitive [long term].”

Nike continues to be rated as sector-weight by KeyBanc Capital Markets.

Related: Nike blunders raise the athleisure market

Nike CEO Donahoe stated during the company’s fourth-quarter conference call that Speed Lane and the Bowerman Footwear Lab are being used by the company to expedite design, and digital tools are being utilised to expedite development. He said that the large athletic wear company is also collaborating with manufacturing partners to expedite product testing and production, and that it has already used the new capability to expedite the development of six models.

Of the forty analysts FactSet polled, 22 rate Nike as overweight or buy, fifteen as hold, and three as sell.

Related: Direct sales of a “denim lifestyle” are what Levi’s hopes to accomplish. Wall Street needs more persuasion.

In 2024, Nike’s stock has lost thirty-six percent of its value, while the S&P 500 index has gained 14.5%.

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