On Monday, Baird took a revised stance on Nike Inc. (NYSE: NYSE:NKE), adjusting the company's price target to $105 from the previous $110 while continuing to endorse an Outperform rating on the stock.
The firm's analysis follows the recent earnings report where Nike's second fiscal quarter earnings per share (EPS) outperformed the consensus estimates by $0.14. Currently trading at $76.94, Nike's stock sits significantly below its 52-week high of $110.80, while InvestingPro data shows 19 analysts have revised their earnings expectations downward for the upcoming period.
The new price target reflects a more cautious short-term outlook as Nike prepares to undertake significant reset actions in the second half of fiscal year 2025. These actions are seen as crucial for the company's strategic realignment but may temporarily dampen investor confidence. The company maintains strong fundamentals with a current ratio of 2.22 and operates with a moderate debt level, though revenue declined by approximately 5% in the last twelve months.
Nike's leadership, including new CEO Elliott Hill, has emphasized a commitment to innovation and a strategic pivot towards performance-based products, improved market segmentation, and maintaining a full-priced marketplace across various sales channels.
Hill's enthusiasm for the brand and its future was evident as he discussed his vision for the company's trajectory. Want deeper insights? InvestingPro subscribers get access to over 30 additional premium insights and a comprehensive Pro Research Report for Nike, along with 1,400+ other top stocks.
The analyst from Baird believes that although the reset actions in the latter half of fiscal 2025 are aggressive, they are necessary steps to prime the company for a product-led surge starting in fiscal year 2026. The expectation is that these efforts will eventually lead to a significant increase in Nike's stock value as the market begins to factor in the anticipated recovery of margins and earnings. According to InvestingPro's Fair Value analysis, Nike's current stock price appears to be fairly valued, with the company maintaining a healthy gross profit margin of 44.73%.
In other recent news, Nike Inc. has seen a series of adjustments in analysts' price targets. Truist Securities lowered its price target for Nike to $90 while maintaining a buy rating, reflecting anticipated near-term challenges due to new CEO Elliot Hill's efforts to revitalize the company's operations. However, the firm remains optimistic about Nike's future potential. Meanwhile, Stifel reduced its price target for Nike to $75, maintaining a hold rating, based on estimated earnings per share (EPS) of $2.88 for fiscal year 2027. The firm also anticipates a significant drop in Nike's gross margins.
TD Cowen also adjusted its price target for Nike, reducing it from $73 to $69, while maintaining a hold rating. The firm raised concerns about potential reductions in Nike's FY26 EPS. Williams Trading revised its price target for Nike to $93 from $97, keeping a buy rating, and revised its EPS estimates for FY25 and FY26.
These recent developments come as Nike welcomes its new CEO, Elliott Hill, who aims to reestablish the brand's roots in sports and athleticism. The company is also focusing on strengthening its direct-to-consumer channels to deliver a personalized shopping experience and increase market share. Despite the adjustments in price targets and EPS estimates, analysts remain watchful of Nike's strategic initiatives and future prospects.
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