TSX runs higher on rate cut expectations
On Tuesday, Piper Sandler reiterated an Overweight rating on Nike stock (NYSE:NKE) with a maintained price target of $90.00, representing significant upside from the current price of $67.39. The stock has declined 26.78% over the past year and is trading near its 52-week low of $65.17. According to InvestingPro data, 16 analysts have recently revised their earnings expectations downward for the upcoming period. The firm’s analyst provided an updated perspective on the expected decline of Nike’s Classics franchises, projecting significant reductions in sales.
Nike’s Classics sales are forecasted to drop to $7.3 billion in fiscal year 2025, representing a roughly 40% year-over-over decrease. For perspective, Nike’s total revenue currently stands at $47.82 billion, with InvestingPro forecasting an 11% overall revenue decline for fiscal year 2025. This decline is anticipated to create a 9% headwind to Nike’s total sales, which is more substantial than the mid-single-digit impact mentioned in the first quarter of fiscal year 2025. For fiscal year 2026, an additional 18% decline in Classics sales is expected, contributing to a 3% headwind to the company’s total sales for that year.
The analysis includes detailed projections for individual franchises. The Air Force 1 (AF1) is expected to show a 1% decrease in sales by fiscal year 2026, which would mark the beginning of sales stabilization. The Air Jordan 1 (AJ1) is projected to see a 10% sales decline, while the Dunk is anticipated to drop an additional 40%. Consequently, the Classics’ share of total Nike sales is predicted to fall from 23% in fiscal year 2024 to 13% in fiscal year 2026.
Despite these declines, Piper Sandler’s outlook remains cautiously optimistic. According to the analyst, management’s innovation efforts are nearly balancing out the decrease in Classics for the Fall 2025 order books across the three main geographies. This balance is expected to improve further over the Holiday season. The firm’s projections are deemed conservative, aligning with the company’s expectations of unit sales decreasing by double digits. InvestingPro analysis shows Nike maintains strong fundamentals with a healthy current ratio of 2.19 and sufficient cash flows to cover interest payments. Discover more insights and 12 additional ProTips about Nike’s financial health in the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Nike reported third-quarter earnings that exceeded some analysts’ expectations, with revenues reaching $11,269 million, surpassing the projected $10,924 million. Earnings per share also outperformed estimates at $0.54, compared to the anticipated $0.22. Despite these results, several firms have adjusted their price targets for Nike. Truist Securities lowered its target to $82 while maintaining a Buy rating, citing the company’s intensified efforts to revamp its operations. UBS also reduced its price target to $66, maintaining a Neutral rating, reflecting concerns about the company’s earnings outlook. Stifel kept a Hold rating with a $75 target, noting challenges in Greater China and the need for a few quarters before seeing a positive revenue shift. Baird adjusted its target to $99, maintaining an Outperform rating, highlighting ongoing product and marketing initiatives as positive signs for recovery. DA Davidson reiterated a Buy rating with a $273 target, emphasizing improvements in Nike’s North American business and wholesale revenues. These developments indicate varying analyst perspectives on Nike’s strategic direction and potential growth trajectory.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.