On Friday, KeyBanc Capital Markets maintained a Sector Weight rating on Nike Inc. shares (NYSE:NKE), acknowledging the company's better-than-expected second-quarter results. Despite a year-over-year revenue decline of 8%, the performance surpassed the anticipated 10% drop, bolstered by a strong Black Friday and improved November traffic.
According to InvestingPro data, Nike's revenue reached $50 billion in the last twelve months, though analysts anticipate an 8% sales decline this year. This outperformance was attributed to ongoing restructuring challenges, softer unit sales, and decreased traffic at Nike Direct.
Nike's recent actions to expedite its realignment efforts were noted, with the Fall/Holiday 2025 season marked as a potential turning point for introducing significant new products. However, the timeline for Nike's recovery remains uncertain, especially given the increasing discounts required to sell through products.
The company's path to return to full-price sell-through is unclear, with no specific forecast provided. InvestingPro analysis indicates Nike is currently trading at a high P/E ratio relative to near-term earnings growth, with 12 analysts revising their earnings expectations downward.
The analyst from KeyBanc highlighted that while near-term actions are gaining momentum, the headwinds Nike faces are expected to continue. The report pointed out the difficulty in predicting how long it will take for Nike to overcome these challenges and return to its previous performance levels. The ongoing restructuring within the company is a key factor in this uncertainty.
Nike's strategic adjustments aim to address the issues it's facing, but the exact outcomes and effectiveness of these changes are yet to be seen. The anticipation of new product launches in the coming years presents a potential opportunity for Nike to revitalize its brand and product appeal.
The Sector Weight rating by KeyBanc indicates a neutral stance on Nike's stock, suggesting that the firm does not currently see Nike as outperforming or underperforming the broader market or industry sector. This rating reflects the analyst's view that Nike's stock is expected to perform in line with the sector average.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.