Nike Shares (NYSE:NKE) Down 0.89% As Analysts Trim Targets. Earnings Coming Tomorrow

Nike shares are trading down on the morning session, losing 0.89%, hovering just above the $99 mark.

It is the eve of Nike's fiscal Q3 2024 earnings release, and the markets are keenly evaluating whether the iconic sportswear company's stock, which has witnessed significant underperformance in the past year, represents a buying opportunity ahead of its latest financial report.

Over the past 12 months, NKE is trading down by more than 18%, as others around them are pushing to the upside. This downtrend continues a slump from 2022, in which Nike stock fell from $148 at the beginning of the year, not looking likely to trouble that mark since. Currently, shares are trading significantly below the all-time closing high of over $177, achieved in November 2021.

Analysts' expectations for Nike's fiscal Q3 paint a picture of ongoing challenges. Revenues are projected to dip slightly by 0.8% year-over-year to $12.3 billion, and earnings per share are anticipated to fall by 12.7% for the quarter. This less rosy outlook has been attributed to a confluence of factors by Nike's CFO, Matt Friend. He cited macroeconomic headwinds in critical markets such as Greater China and the EMEA region, subdued digital traffic, and unfavourable currency exchange impacts as key reasons behind the tempered revenue expectations.

These headwinds have spawned a divide among Wall Street analysts, with Wedbush downgrading the stock this week from $131 to $115. They do keep an Outperform rating and remain “long term optimistic”. BofA are another to lower their price target to $120 from $125, as the “slightly negative guidance” weighs on expectations from earnings tomorrow. Citi, RBC, Morgan Stanley, and Tesley Advisory all lower their guidance over the past week but it is not all looking bad from analysts.

The consensus price target remains a smidge above $121, which, if achieved represents an upside of 22% from here.

Heading into the earnings release, it’s clear that Nike is at a pivotal juncture. The company is grappling with short-term headwinds that are reflected in its share price, creating uncertainty amongst investors about the immediate future. However, the viewpoint that Nike's stock price could be poised for recovery in the medium to long term is backed by strategic actions underway, including product innovation and cost cuts.

The broader consensus acknowledges that Nike's strong brand, extensive global market presence, and ongoing strategic measures may well position the company to navigate through current challenges and emerge stronger. We will watch closely at what tomorrow brings.