Needham remains cautious on Nike stock, sees more downside risk

Investing.com -- In a note on Thursday, Needham reiterated its Hold rating on Nike (NYSE: NKE) and cut its earnings estimates ahead of the company's fiscal first-quarter results on Oct. 1 after the close, warning that the stock could keep falling.

"We believe demand trends remain soft, inventory levels remain high, promotional activity remains intense, and competitive dynamics remain unfavorable," analyst Tom Nikic wrote.

Nike shares closed at $36.05 on Wednesday and are down around 0.8% to $35.77 so far today.

Nikic said two negative developments have emerged since Nike's fourth-quarter earnings call in late June.

First, U.S. back-to-school demand weakened. That led to missed sales targets and lower guidance at Dick's Sporting Goods, which owns Foot Locker, and at JD Sports. Second, two key wholesale partners in China said they will stop selling Nike products online.

As a result, Needham lowered its fiscal 2027 earnings per share forecast to $1.64 from $1.74. It cut its fiscal 2028 estimate to $1.80 from $2.00. The firm does not have a price target on the stock.

Nikic said the "path of least resistance" for Nike shares could remain downward. He pointed to a tough market and his expectation that earnings forecasts will keep falling.

The comments add to growing pressure on the sportswear maker's turnaround, with shares down almost 50% in the last 12 months and over 44% year-to-date.

Original Article

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