Needham lowers Nike stock price target on challenging near-term trends

Needham lowered its price target on Nike (NYSE:NKE) to $66.00 from $75.00 on Wednesday, while maintaining a Buy rating on the athletic apparel giant’s stock. According to InvestingPro data, Nike currently trades at $60, with analysis suggesting the stock may be undervalued despite recent challenges. The company maintains strong fundamentals with a healthy current ratio of 2.19.

The research firm cited "challenging" near-term trends for Nike, including headwinds from rationalizing over-supplied product franchises such as Jordan and Dunk, lukewarm brand heat, and newly imposed tariffs as factors in its decision to reduce the price target. These concerns align with InvestingPro data showing an expected 11% revenue decline for fiscal 2025.

Needham adjusted its earnings estimates for Nike, raising its fourth-quarter fiscal 2025 EPS forecast by ten cents to $2.18, while lowering its fiscal 2026 and 2027 forecasts to $1.52 and $2.15, respectively, down from previous estimates of $1.75 and $2.42.

The firm’s revised estimates fall significantly below Wall Street’s consensus forecasts of $1.87 for fiscal 2026 and $2.63 for fiscal 2027, reflecting Needham’s more cautious outlook on Nike’s near-term performance.

Despite the reduced price target, Needham maintained its long-term bullish stance on Nike, citing "changes in leadership/strategy that should eventually reverse NKE’s flagging P&L," though it warned that "risk/reward is skewed negatively" ahead of Nike’s fourth-quarter earnings report scheduled for June 26.

In other recent news, Nike is preparing for its upcoming fourth-quarter earnings report with varied analyst expectations. Piper Sandler has reiterated an Overweight rating with a $70.00 price target, highlighting potential sales growth from new distribution efforts despite current challenges. Meanwhile, Morgan Stanley has lowered its price target to $61.00, citing a prolonged turnaround and anticipated downward revisions in earnings estimates for fiscal year 2026. Citi maintains a Neutral rating, projecting a potential earnings beat for the fourth quarter but expects sales declines in early fiscal 2026. UBS also maintains a Neutral rating with a $56.00 price target, forecasting in-line fourth-quarter earnings and potential guidance below consensus expectations. Goldman Sachs, on the other hand, continues to recommend buying Nike stock, maintaining a $72.00 price target amidst investor skepticism about near-term prospects. Analysts from these firms express varying degrees of optimism and caution, reflecting ongoing uncertainties in Nike’s market performance and strategic initiatives.

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