HomeMarket NewsNike loses its bull rating at Jefferies due to concerns over consumer...

Nike loses its bull rating at Jefferies due to concerns over consumer slowdown

Actionable Trade Ideas

always free

Soles With Soul: A Celebration Of Hip Hop & Culture Sneaker Ball

Jason Davis/Getty Images Entertainment

Jefferies, a prominent financial services company, downgraded the bull rating of Nike (NYSE: NKE) to a Hold rating on Monday. This decision comes just prior to Nike’s upcoming earnings report scheduled for September 28.

Randal Konik, an analyst at Jefferies, expressed concerns over the potential risks lying ahead for Nike. He specifically mentioned the ongoing pressures in the wholesale channel and the prevailing macro headwinds in China that could hamper growth. Furthermore, Konik referred to their consumer survey results which indicate that US consumers have intentions to reduce spending, particularly in the areas of apparel and footwear.

The survey conducted by Jefferies revealed that a significant proportion of US consumers with student debt, approximately 87%, are worried about meeting their monthly expenses. In response, they plan to cut back on spending, with the majority planning to reduce their expenditure on apparel/accessories and footwear. The results of this survey suggest that the US consumer spending will be under duress, potentially impacting Nike’s sales.

In light of these concerns, Jefferies has also revised its price target for Nike to $100.

Nike Earnings Preview

Nike is set to announce its earnings on September 28, with industry experts eagerly awaiting the results. These earnings have broader implications for the apparel and footwear sectors as a whole. Analysts forecast that Nike will report revenue of $13.0 billion and earnings per share (EPS) of $0.76 for the quarter. While there is expected to be a decline of 1.6% in sales within the North America segment, there is anticipated growth of 4.5% in the Europe, Middle East & Africa segment, and a substantial 16.6% increase in the Greater China segment. Digital sales are also projected to rise by 15.9% during this quarter. Nike’s inventory is expected to decrease by 8.7% at the end of the quarter, reflecting an improved inventory turnover rate. The stock market is anticipating a 6% price move for Nike following the release of these earnings. It is noteworthy that, historically, Foot Locker, DICK’S Sporting Goods, and Skechers have closely correlated with Nike’s performance on earnings day.

As a result of Jefferies’ downgrade, the premarket trading of Nike saw a decrease of 1.31% on Monday.

Swing Trading Ideas and Market Commentary

Need some new swing ideas? Get free weekly swing ideas and market commentary from Jonathan Bernstein here: Swing Trading.

Explore More

Weekly In-Depth Market Analysis and Actionable Trade Ideas

Get institutional-level analysis and trade ideas to take your trading to the next level, sign up for free and become apart of the community.