Nike 'still not out of the woods,' analyst says, as stock drops after earnings

By Steve Gelsi

Jefferies analyst Randal Konik says athletic-apparel company 'beat a low bar' with its earnings results, while company fell short of revenue estimates

Nike Inc.'s stock fell 8% on Wednesday after the athletic-apparel company's latest quarterly results disappointed investors.

Jefferies analyst Randal Konik said the company is "still not out of the woods" after hiring a new chief executive.

Nike's stock (NKE) dropped $6.19 to $82.19 on the heels of its results that included stronger-than-expected earnings but revenue that fell short of estimates. Nike also cut its sales outlook for the year.

Jefferies analyst Konik reiterated a hold rating on Nike and said the company's earnings of 70 cents a share "beat a low bar" estimate of 52 cents a share from Wall Street analysts.

It's not yet time to buy its stock because it will take time for incoming Chief Executive Elliott Hill to carry out changes at the company, Konik said.

"There are a lot of changes that need to take place, while we await CEO-elect Hill's strategic plans," Konik said in a research note published on Wednesday. "In the meantime market share losses are likely to continue... and the consumer becomes more challenged."

Truist analyst Joseph Civello reiterated a hold rating on Nike and said the company's visbility into its business "appears lower than we previously anticipated, which adds an incremental layer of difficulty to an already-tough task for incoming CEO Elliott Hill."

While Nike bulls have been anticipating turnaround plans to bear fruit in the Spring 2026 fashion cycle, "that timeline may prove optimistic," Civello said.

JPMorgan analyst Matthew Boss reiterated a neutral rating on Nike and said the company faces "an elongated timeline" to "re-accelerate revenue growth in the midst of a franchise product lifecycle transition."

Nike faces headwinds in China as well Europe, the Middle East and Africa which are "further complicating" its path forward, he said.

"While we see continued annual gross margin expansion (strategic pricing benefits & lower product costs), NKE intends to continue to reinvest notably across demand creation to support new innovation as it scales in the marketplace & brand-building efforts," Boss said.

Oppenheimer analyst Brian Nagel was more upbeat. He reiterated an outperform rating for Nike and said management remains optimistic about the company's product pipeline.

"Nike wholesale partners are responding well to new product innovations and efforts on the part of Nike to elevate and differentiate the brand in retail, helping to drive double-digit revenue growth in new products in the quarter," Nagel said in a research note.

The company has launched a new running shoe priced below the $100 mark which will "allow the brand to be more accessible to lower price-point consumers," Nagel said.

Prior to Wednesday's trading, Nike's stock had fallen 17.9% in 2024, compared to a 19.7% rise by the S&P 500 SPX.

-Steve Gelsi

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10-02-24 1004ET

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