"The magnitude of the target cut tells the story. Dropping from $90 to $48 doesn't represent a minor recalibration. It reflects a fundamental reassessment of how long Nike's recovery will realistically take and what the business is worth while investors wait."
"HSBC points to persistent weakness across Converse, China, Europe Middle East and Africa, and sportswear as the primary drags. These aren't new problems. Nike's Converse revenue fell 35% year over year in the most recent quarter, and Greater China revenue declined 7% in that same period."
"Nike has beaten earnings estimates in each of the last four quarters, but the profitability picture underneath those beats is deteriorating. Net income fell 35% year over year in the most recent quarter, and operating income dropped 19%."
HSBC downgraded Nike's stock from Buy to Hold, reducing the price target from $90 to $48. Despite four consecutive EPS beats, the stock is down 33% year to date. The downgrade highlights a lack of short-term catalysts and persistent weaknesses in key markets, including Converse and Greater China. Analysts note that while earnings estimates have been beaten, net income and operating income have significantly declined, indicating underlying issues despite headline performance. The broader analyst community remains more optimistic, with a consensus price target of $63.64.
Read at 24/7 Wall St.
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