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NKE

Nike

$51.03

-1.87 (-3.54%)

11:02
06/16/17
06/16
11:02
06/16/17
11:02

Battleground: Analysts clash on Nike after restructuring announced

Two research firms had very different outlooks on Nike (NKE) after the sneaker maker announced that it would restructure its workforce and lay off 2% of its employees. Robert W. Baird, noting that Nike's stock outperformed for many years following the company's 2009 restructuring, thinks that history is likely to repeat itself. Conversely, JPMorgan downgraded the shares, warning that the company's North America sales will probably get worse before they get better. BAIRD: In 2009, Nike announced that it would focus on key initiatives and reduce its headcount by 5%, noted Baird analyst Jonathan Komp. Beginning later in 2009, the stock significantly outperformed the market for a number of years, the analyst pointed out. Komp added that the headcount cuts announced yesterday appear to be justified, since the company has 2.1 times more employees than it did in fiscal 2010, but its revenue has risen just 1.7 times during the same time period. The analyst is also upbeat on the other components of the initiative, saying they are "intended to streamline and speed up strategic execution" which has been a key concern of investors. Additionally, he thinks that the changes should result in "an artful balance of cost reductions and innovation/product investments." The analyst expressed caution about Nike's upcoming fourth quarter results, but said that the stock will probably provide "a compelling buying opportunity" following that report. He kept a $62 price target and an Outperform rating on the shares. JPMORGAN: Nike's North America growth tumbled to 3% over the last 12 months, versus an average of 12% from 2012-2016, wrote JPMorgan analyst Matthew Boss. Given that 8%-9% of Nike's North America revenue is derived from "consolidating brick and mortar" stores and that it has lost space at key retail partners, the company's North America results will probably get worse before they get better, Boss warned. Specifically, in fiscal 2018 the company's North America revenue will be flat, down from 3% growth in fiscal 2017, Boss estimated. Although the analyst was encouraged by Nike's changes, he says that they will take time to impact the company. Boss trimmed his price target on Nike shares to $58 from $61. PRICE ACTION: In morning trading, Nike fell 3.5% after having dropped over 3% yesterday. Following the two day pullback, Nike shares are roughly flat year-to-date.

  • 29

    Jun

NKE Nike
$51.03

-1.87 (-3.54%)

06/16/17
06/16/17
DOWNGRADE

On The Fly: Top five analyst downgrades
Catch up on today's top five analyst downgrades with this list compiled by The Fly: 1. Nike (NKE) downgraded to Neutral from Overweight at JPMorgan with analyst Matthew Boss saying his work suggests Nike's sales in North America are likely to get worse before getting better. 2. Kroger (KR) downgraded to Neutral from Buy at Goldman Sachs, to Neutral from Overweight at JPMorgan, and to Market Perform from Outperform at Telsey Advisory. 3. Booz Allen (BAH) was downgraded to Neutral from Buy at BofA/Merrill, to Hold from Buy at Vertical Research, and to Market Perform from Outperform at Raymond James. 4. Square (SQ) downgraded to Neutral from Outperform at Credit Suisse with analyst Paul Condra saying the shares at current levels are fully valued. 5. Noble Corp. (NE) downgraded to Neutral from Buy at Citi. This list is just a portion of The Fly's full analyst coverage. To see The Fly's full Street Research coverage, click here.
06/16/17
BARD
06/16/17
NO CHANGE
Target $62
BARD
Outperform
Nike restructuring a replay of 2009, suggests buying opportunity, says Baird
Baird analyst Jonathan Komp noted Nike has undergone multiple restructurings, stating that the current one appears to be a replay of its 2009 strategy, which resulted in a very strong multi-year stretch of outperformance for the stock. The analyst said the playbook suggest a compelling buying opportunity post Q4 earnings. Komp maintained his Outperform rating and $62 price target on Nike shares.
06/16/17
JPMS
06/16/17
DOWNGRADE
Target $58
JPMS
Neutral
Nike downgraded to Neutral from Overweight at JPMorgan
JPMorgan analyst Matthew Boss downgraded Nike to Neutral and lowered his price target for the shares to $58 from $61. The footwear giant closed yesterday down 3%, or $1.76, to $52.90. The analyst's work suggests Nike's sales in North America are likely to get worse before getting better. The company changes announced this week will take time, Boss tells investors in a research note. The analyst, however, is "encouraged" by management's cost reductions and "forward thinking initiatives."
06/13/17
ARGS
06/13/17
DOWNGRADE
ARGS
Hold
Foot Locker downgraded to Hold from Buy at Argus
Argus analyst John Staszak downgraded Foot Locker (FL) based on weakening demand for Nike (NKE) footwear. The analyst says that Nike footwear generates more than two-thirds of Foot Locker's revenue, and he thinks that the retailer will have difficulty reaching 5% comp sales growth in the second half of fiscal 2018.

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