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Morgan Stanley (NYSE:MS) lowered its price target on Nike (NYSE:NKE) to $61.00 from $70.00 on Monday, while maintaining an Equalweight rating on the athletic apparel giant’s stock. With a current P/E ratio of 20.44x and revenue of $47.82 billion, InvestingPro analysis suggests Nike is currently trading near its Fair Value.
The firm cited an elongated turnaround timeline for Nike, influenced by recent tariff and macroeconomic developments that have complicated the company’s recovery efforts. This aligns with InvestingPro data showing expected sales and net income declines for the current year, though the company maintains strong financial health with a current ratio of 2.19x.
Morgan Stanley noted it hasn’t received positive feedback from wholesale channels regarding customer demand or upcoming product innovation, and observed no improvement in brand momentum over the last three months.
The research firm expects consensus earnings estimates for fiscal year 2026 will need downward revision, and believes management will likely have to walk back previous expectations for fundamental improvement following the fourth quarter.
Despite acknowledging that Nike’s initial strategy execution appears on track based on wholesale checks, Morgan Stanley views the path to improved fundamentals as longer and more volatile than previously anticipated, making it difficult for investors to commit to a turnaround story in the near term.
In other recent news, Nike is preparing to announce its fourth-quarter earnings, with Citi expecting the company to surpass earnings estimates due to stronger sales and reduced administrative expenses. However, UBS projects only an in-line earnings per share result, citing weak global sales trends. Both Citi and UBS anticipate that Nike may not provide full fiscal year 2026 guidance, with UBS expecting any guidance to be significantly below current market expectations. Goldman Sachs, maintaining a buy rating on Nike, acknowledges investor skepticism about the company’s near-term prospects but notes improved consumer engagement with recent product innovations. Meanwhile, Truist analysts have observed Nike’s recent price hikes on select footwear lines, which are part of a strategy to adjust pricing in the current retail environment. Additionally, Nike announced the appointment of Michael Gonda as the new Executive Vice President and Chief Communications Officer, effective July 7, 2025. Gonda will lead the global communications strategy, bringing experience from his previous roles at McDonald’s (NYSE:MCD) and other companies. These developments indicate ongoing strategic adjustments at Nike as it navigates various market challenges.
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