Wall Street Adjusts Outlook on Nike Ahead of Critical Earnings Report

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As Nike approaches its quarterly earnings release, a wave of downward revisions from Wall Street analysts signals growing impatience with the sportswear giant's ongoing turnaround efforts. The company's shares face significant pressure just over a week before its next financial update.

In a series of moves this week, prominent financial institutions have lowered their expectations for Nike's stock. Citigroup adjusted its price target downward to $70 from $74, while maintaining a neutral stance on the shares. A more pronounced cut came from Rothschild & Co Redburn, which slashed its target to $56 from $65 and reaffirmed a sell rating on the equity.

These revisions arrive during a challenging period for the stock. Currently trading around $64 per share, Nike's price sits approximately 20% below its February peak. Year-to-date, the shares show a decline of 13%, a stark contrast to the S&P 500's 14% gain over the same timeframe.

Not all analysts share this cautious view. RBC Capital Markets remains optimistic, reiterating its buy recommendation. Analyst Piral Dadhania pointed to progress in inventory reduction and suggested the major cleanup of excess stock is largely complete, anticipating no significant surprises in the upcoming Q2 report.

Management Restructures for Agility

In early December, CEO Elliott Hill initiated a substantial corporate reorganization under a "Win Now" strategy designed to streamline operations. The changes aim to flatten hierarchies, accelerate decision-making, and integrate technology more deeply into core business functions.

Key leadership changes include:
* The promotion of Venkatesh Alagirisamy to Chief Operating Officer, with expanded responsibility for technology.
* The elimination of the Chief Technology Officer and Chief Commercial Officer positions.
* A new reporting structure where global sales and Nike Direct now report directly to Chief Financial Officer Matt Friend.
* The elevation of regional leaders to the company's top management team.

Focus Turns to December 18 Earnings

Market expectations for the fiscal second-quarter results, scheduled for release on December 18, are subdued. Company guidance anticipates a slight revenue decline in the low single-digit percentage range. Furthermore, the gross margin is projected to be significantly pressured, contracting by 300 to 375 basis points, partly due to new tariff implementations.

The longer-term analyst consensus forecasts a 2.4% revenue drop for the full fiscal year 2026, with earnings per share expected to fall roughly 24% to about $1.65. At this level, the stock trades at a demanding forward price-to-earnings multiple of 35.6.

Despite near-term headwinds, Nike's balance sheet provides flexibility, featuring manageable debt levels and solid liquidity. The company recently raised its quarterly dividend by 2.5% to $0.41 per share. Looking ahead to 2027, some analysts project a potential recovery, with revenue growth of 5% and a 54% surge in earnings—contingent on the successful execution of the current turnaround plan. The upcoming earnings report will offer a crucial checkpoint on whether this optimistic scenario remains plausible.