The shares of Nike Inc (NKE) have experienced a significant decline today. This downturn follows an analyst downgrade by Oppenheimer and news of over 1,600 job cuts enacted by the company.
Analyst Downgrade and Cost-saving Initiative
Oppenheimer, a respected financial analyst, downgraded Nike from Outperform to Perform and adjusted the price target to $110, a notable decrease from the previous target of $150. This decision was influenced by the company’s plan to reduce its workforce by over 1,600 employees, aiming to concentrate efforts on key product categories such as running shoes and women’s apparel.
Nike’s initiative to achieve cumulative cost savings of up to $2 billion in the next three years aligns with the job cuts. However, this cost-saving strategy has caused concern among investors and analysts alike, leading to a dimmer outlook for the athletic footwear and apparel giant.
Impending Financial Projections
According to Oppenheimer, Nike’s top-line performance is anticipated to remain lackluster in the upcoming quarters, falling below industry expectations. Several factors contributed to this forecast, including uneven consumer demand, lapses in product innovation, and moderate encroachment by competitors in specific market segments.
For the third quarter of the fiscal year, Oppenheimer has decreased the earnings per share (EPS) estimate to $0.74 from $0.96, in contrast to the consensus of $0.76, with a projected decline of 0.7% in currency-adjusted revenue growth, down from the previous estimate of +5%. Looking ahead to the fiscal year 2026, Oppenheimer has revised its EPS estimate to $4.57 from $5.20, not meeting the consensus of $4.95, and anticipates a modest gain in currency-adjusted sales of 5%-7%.
Market Response
As a direct consequence of these developments, the stock value of Nike has plummeted by 3% and was valued at $102.87 at the last market check on Friday. This signifies a notable reduction in investor confidence in the company’s future financial performance, leading to a poor market response. The impact of both the analyst downgrade and the cost-saving measures is being observed in real-time through the decline in share price.
Image: Shutterstock/ pio3
