Nike (NKE) PT Lowered to $30 at Goldman Sachs

Goldman Sachs analyst Brooke Roach lowered the price target on Nike (NYSE: NKE) to $30.00 (from $38.00) while maintaining a Neutral rating.

The analyst comments "Alongside F1Q results, NKE introduced FY27 guidance materially below FactSet expectations and introduced Pace, a new operating model transformation plan. While NKE continues to demonstrate healthy growth in its performance business (+DD%), this is more than offset by significant pressure in its Sportswear, Jordan, and China businesses, down LDD%, mid-teens%, and -26% ex-FX, respectively. Given the scale of these businesses (performance only ~1/3 of revenues in FY26), Nike outlined that the significant actions the company is taking to return the business to a healthy marketplace will meaningfully impact FY27 and continue into FY28. Margins are also now expected to come under pressure as a result of deleverage. While this represents a significant reset, strategic actions continue into FY28 and NKE will have to lap the tailwinds from the World Cup. As a result, we expect the key debate from here to be the earnings power of NKE in FY28 under various scenarios and the pace of potential revenue and profit recovery ahead. Is FY27 a trough or will FY28 be another step lower? Next catalyst: The next catalyst for NKE is the company's Investor Day, which will be held November 17th. At the event, we look for a better understanding of the company's plans for each of its pressured businesses. In Sportswear, management outlined plans to create a deep bench of winners and reduce the sea of sameness - how long will this take and how much longer should we expect a reset of legacy products? At Jordan brand, management is focused on returning to a scarcity model - how much of a reset is needed for this to occur and what plans does the brand have to drive heat? And in China, management indicated the digital business cleanup will take several seasons. Beyond top line, we look for a better understanding of management's 5-yr growth algorithm, NKE's plans for marketing as a $ and % of sales, the drivers and cadencing of the Pace cost savings program (including reinvestment priorities), and a view of the path for NKE's operating profit recovery journey (is double digit achievable on a 5-yr basis, and if so, how quickly)?"

You May Also Be Interested In

• BTIG on Nike (NKE): 'We came away impressed with both his strategic mindset and leadership approach'
• United Rentals (URI) PT Raised to $1,325 at BofA Securities
• PPL Corp (PPL) PT Lowered to $37 at BofA Securities