Consumer Discretionary

Nike (NKE) shares will likely have a difficult time recovering ground in the short-run after the athletic footwear maker cut its yearly sales outlook, Morgan Stanley said on Friday. The maker of Air Max, Air Jordans, and other sports shoes and accessories reduced its fiscal year revenue outlook to 1% growth, Chief Financial Officer Matthew Friend said on a conference call late Thursday, according to a Capital IQ transcript. It previously expected mid-single-digit percentage growth. Nike shares were sliding 10% to $109.67 during Friday’s session. The “disappointing” guidance overshadowed the company’s second-quarter profitability resilience, Morgan Stanley said in a note. “We aren’t hopeful for a (near-term) stock bounce,” given Nike’s elongated and uncertain path back to high-single digit revenue growth, according to the brokerage. The company’s revised guidance also dulled its “formerly compelling” rate-of-change story in the second half of the fiscal year. Friend said on the call that Nike’s

Nike’s (NKE) fiscal Q2 results were “solid” overall, though its full-year guidance disappointed, Morgan Stanley said Friday. Late Thursday, the athletic footwear and apparel maker reported that its fiscal Q2 per-share earnings rose to $1.03 from $0.85 a year earlier, while revenue advanced 1% to $13.39 billion. The report showed the “resilience” of the company’s profitability, Morgan Stanley said in a note. “While 2Q revenue growth remained uninspiring, it came in no worse than market expectations.” The firm cut its price target on the Nike stock to $124 from $132 while keeping its overweight rating. Nike lowered its fiscal year revenue outlook to 1% growth from its previous expectations of mid-single-digit percentage growth. “Although investors were braced for lower [2024] revenue guidance given the recent branded peer trend/results, the magnitude of [Nike’s] cut surprised to the downside,” Morgan Stanley said in the note.

CFRA analyst Zachary Warring underlined that Nike’s competitors could eat into some of the demand. “Although Nike maintains a fortress balance sheet with significant capital returns, we believe the multiple will trend back down to pre-pandemic levels as the company faces competition from brands like Hoka and On [Holding] while it looks for new growth drivers and focuses on cutting costs,” Warring said.

After posting softer-than-expected revenue guidance in its fiscal second-quarter earnings, Nike Inc. (NYSE:NKE) is banking on “newness and innovation” to drive growth. However, one analyst struck a discordant note, stating that its fastest-growing piece of business is at risk. What Happened: ‘Just Do It’ might not be working for Nike, but analysts were largely positive on the company’s prospects, with most ratings being “Buy,” “Outperform,” or “Overweight.” However, TD Cowen analyst John Kernan is not as optimistic about Nike’s strategy, casting doubt on the growth prospects of the sneaker maker. “Nike needs improved marketing outside of basketball, streetwear and lifestyle trends,” Kernan said in a research note on Friday, downgrading the stock from “Outperform” to “Market Perform.” “Nike faces disruption from smaller competitors in footwear and apparel. Jordan brand moving into lower price points and away from a scarcity model creates risk to the fastest-growing piece of the business,” Kernan