On Friday, TD Cowen adjusted its outlook on Nike (NYSE:NKE) shares, reducing the price target to $91 from the previous $104 while maintaining a Market Perform rating. The firm's decision comes in light of Nike's management discussing expected revenue declines in the first half of fiscal year 2025, which could put pressure on the company's valuation and consensus estimates.
In the report, TD Cowen noted that their new forecast for Nike's fiscal year 2025 earnings per share (EPS) is $3.82, which falls below the consensus estimate of $4.18. The analyst reflected on Nike's historical performance, mentioning that the company's shares previously hit a low at 19 times FY2 earnings per share in 2017 and 2018. During that period, Nike faced a less robust product cycle and increased competitive pressure from Adidas (OTC:ADDYY).
The current trading value of Nike's stock is at 22 times the projected earnings for fiscal year 2026. This valuation persists despite the analyst's observation that the competitive environment and channel dynamics Nike faces today are more challenging than in previous years.
TD Cowen's assessment indicates caution due to the anticipated revenue downturn in the upcoming fiscal periods. The firm's analysis suggests that these factors could influence investor sentiment and the stock's future performance in the market.
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