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Investing.com - Raymond (NSE:RYMD) James reiterated its Market Perform rating on Nike (NYSE:NKE) as the sportswear giant, currently valued at $88.25 billion, prepares to report its fiscal fourth-quarter earnings on June 26. According to InvestingPro data, analysts anticipate an 11% revenue decline for the current fiscal year.
The firm expects Nike’s fourth-quarter results to be "less bad than expected" based on channel checks showing significant year-over-year reductions in promotional activity across men’s and women’s footwear and apparel. This reduction in discounting indicates Nike has made progress working through aged inventory, while maintaining a healthy gross margin of 43.82% and a strong current ratio of 2.19.
Raymond James lowered its fiscal year 2026 earnings estimates due to tariff concerns, which it estimates will create an unmitigated 150 basis point gross margin headwind. However, the firm raised revenue estimates based on favorable foreign exchange impacts, now expected to provide approximately 1.5% benefit to fiscal 2026 revenue growth. For deeper insights into Nike’s financial health and growth prospects, InvestingPro subscribers can access exclusive analysis and 10+ additional ProTips.
Multiple challenges continue to weigh on Nike’s outlook, including likely revenue declines in the first half of fiscal 2026, gross margin pressures including tariffs, ongoing challenges in China, and direct-to-consumer channels no longer providing growth momentum.
The firm’s analysis of Google (NASDAQ:GOOGL) Trends, web traffic, and store traffic data showed quarter-over-quarter improvement, supporting the view that "the worst of Nike’s sales declines has passed," though Raymond James maintained its neutral stance as it seeks better risk/reward opportunities.
In other recent news, Nike’s upcoming fourth-quarter fiscal 2025 results are expected to align with Street estimates, projecting $10.7 billion in revenue and earnings per share of $0.12, according to Stifel. The firm maintains a Hold rating and a $64 price target, citing concerns about Nike’s path to sustainable growth. Meanwhile, Needham has lowered its price target on Nike to $66.00 from $75.00, maintaining a Buy rating but citing challenges such as product oversupply and new tariffs. Piper Sandler reiterated its Overweight rating with a $70.00 price target, noting a significant reduction in sale items and potential sales growth from new distribution efforts. Morgan Stanley (NYSE:MS) also adjusted its price target down to $61.00, maintaining an Equalweight rating due to an extended turnaround timeline and lack of brand momentum. In corporate governance news, Cathleen Benko will retire from Nike’s Board of Directors at the 2025 annual meeting, with no disagreements cited regarding her departure. These developments reflect various analyst perspectives and strategic shifts as Nike navigates its current business environment.
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