Is Nike Stock Still a Buy After Earnings?

(Image credit: Aaron M. Sprecher/Getty Images)

published 2 October 2024

Nike (NKE) stock is spiraling Wednesday after the athletic apparel and footwear retailer reported mixed results for its fiscal first quarter, withdrew its full-year guidance and postponed its investor day.

At last check, NKE is down more than 8%, easily making it the worst Dow Jones stock of the session.

In the three months ended August 31, Nike's revenue decreased 10.4% year over year to $11.6 billion. Its earnings per share (EPS) slumped 25.5% from the year-ago period to 70 cents.

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"Nike's first-quarter results largely met our expectations," said Nike Chief Financial Officer Matthew Friend in a statement. "A comeback at this scale takes time, but we see early wins – from momentum in key sports to accelerating our pace of newness and innovation."

The results were mixed compared with what analysts were expecting. Wall Street was anticipating revenue of $11.65 billion and earnings of 52 cents per share, according to Yahoo Finance.

As a result of Nike's upcoming CEO switch, with Elliott Hill replacing John Donahoe later this month, the company withdrew its full-year guidance and postponed its investor day.

"Given our CEO transition and with three quarters left in the fiscal year, we are withdrawing our full-year guidance. We intend to provide quarterly guidance for the balance of the fiscal year," Friend said on Nike's conference call. "This provides Elliott with the flexibility to reconnect with our employees and teams, evaluate the current strategies and business trends, and develop our plans to best position the business for fiscal 2026 and beyond."

Nike had previously forecast revenue to be down in the mid-single digits in its current fiscal year.

Is Nike stock a buy, sell or hold?

Nike has been running up the price charts in recent months, rallying nearly 20% from late June through the October 1 close. Still, shares remain roughly 24% lower for the year to date, including Wednesday's post-earnings plunge.

Nevertheless, most of Wall Street remains bullish on the blue chip stock. According to S&P Global Market Intelligence, the average analyst target price for NKE stock is $91.91, representing implied upside of more than 10% to current levels. Additionally, the consensus recommendation is Buy.

Financial services firm Stifel, however, has a Hold rating and a $79 price target on NKE stock.

"NIKE remains the #1 athletic brand with enviable scale advantage and a history of innovation," says Stifel analyst Jim Duffy. "Lofty market share, increasingly credible competition, and recent footwear share losses, however, are resulting in revenue declines and margin pressure. At the current multiple, we believe a return to growth and margin improvement is discounted in shares suggesting risk/reward largely in balance at current levels."

Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.