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On Tuesday, Raymond (NSE:RYMD) James maintained its Market Perform rating on Nike shares (NYSE:NKE) ahead of the company’s fiscal third quarter 2025 results expected on March 20. The stock, currently trading at $73.70, sits near its 52-week low of $68.62, reflecting recent market pressures. According to InvestingPro data, Nike maintains a Fair financial health rating, with analysts projecting a sales decline in the current year. Raymond James’ analysis suggests that while Nike has effectively managed its sales and general administrative expenses, there may not be significant upside in revenue.
The financial firm anticipates an earnings per share (EPS) of $0.34 for Nike, which is slightly ahead of the Wall Street consensus of $0.32. This projection is based on Nike’s control over sales and general administrative (SG&A) expenses. However, Raymond James does not foresee a substantial increase in revenue, estimating an 11% decline, which aligns with current expectations. The forecast takes into account Nike’s ongoing product assortment adjustments, a deteriorating domestic market evidenced by weaker consumer confidence and negative readings in February, alongside persistent challenges in the China market.
Despite these concerns, Raymond James acknowledges Nike’s successful efforts in clearing out older inventory. Data tracked by the firm showed an increase in the number of discounted products online in December year-over-year, but a significant reduction in February. Additionally, fewer promotions were observed on Nike’s website during seven of the thirteen weeks in the fiscal third quarter compared to the previous year.
Raymond James expects Nike’s gross margin percentage to match the consensus estimate, with a 350 basis point decline due to increased discounting aimed at moving older products to create space for new innovations. The firm also projects an EBIT (earnings before interest and taxes) margin of 5.3%, which is higher than the Street’s expectation of 4.9%, attributing this to better SG&A control.
In conclusion, Raymond James foresees a mixed quarter for Nike, with revenue pressures balanced by margin performance that is better than feared. However, the firm suggests that these results are unlikely to significantly change the stock’s rating. Nike’s financial foundation remains solid, with 23 consecutive years of dividend raises and a current P/E ratio of 22.62x. For deeper insights into Nike’s valuation and growth prospects, including exclusive Fair Value analysis and detailed financial metrics, explore the full research report on InvestingPro.
In other recent news, Nike has secured new credit agreements totaling $3 billion, replacing its existing facilities with a 364-Day Credit Agreement and a Five Year Credit Agreement orchestrated by Bank of America and other financial institutions. The 364-Day Credit Facility allows Nike to borrow up to $1 billion, with the possibility of increasing it to $1.5 billion, while the Five Year Credit Facility provides up to $2 billion, extendable to $3 billion. In the analyst community, TD Cowen adjusted Nike’s stock price target to $75, maintaining a Hold rating, citing improved promotional activities in North America despite weak demand trends. Piper Sandler, meanwhile, maintained an Overweight rating with a $90 price target, noting effective inventory management and strong demand for new products. Needham revised its price target to $80 but upheld a Buy rating, anticipating challenges in the first half of fiscal year 2026 but projecting growth in the latter half. Telsey Advisory Group reiterated a Market Perform rating with an $80 target, focusing on inventory management and product innovation ahead of Nike’s third-quarter earnings report. These developments reflect a mix of cautious optimism and strategic adjustments as Nike navigates through current market conditions.
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