Wells Fargo Downgrades Nike, Citing Weaker Demand

Published 6 hours agoNKE

Wells Fargo Downgrades Nike, Citing Weaker Demand

Wells Fargo has recently lowered its price target for Nike's stock to $92 from $95, due to concerns over lower-than-expected demand and dwindling direct-to-consumer (DTC) sales. The brokerage highlighted Nike's struggles in reviving demand, particularly noticing a sharp 24% year-over-year decline in DTC sales for the second quarter. Sluggish sales of popular products like Air Jordan 1 and Air Force 1 were particularly noted as contributing factors.

In addition to the price target adjustment, Wells Fargo has revised its earnings per share (EPS) estimate for Nike for fiscal year 2024 down to $2.50, which is notably below the consensus estimate of $2.71. This highlights the broader challenges Nike faces in revitalizing its brand and sales. Further signs of this include decreased brand engagement on social media platforms, with mentions down by 13% on Instagram and 37% on TikTok.

Wells Fargo's outlook indicates that Nike's inventory reset strategy might prolong until 2025, which could delay the company's recovery. Despite this, the bank has maintained its "overweight" rating for Nike, reflecting confidence in the company's long-term potential. As reported by Investing.com, while the current conditions are less favorable, Wells Fargo believes strategic changes might eventually support Nike's rebound.

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