TD Cowen analyst John Kernan has maintained their neutral stance on NKE stock, giving a Hold rating on March 19.
John Kernan has given his Hold rating due to a combination of factors influencing Nike’s current financial outlook. Despite a positive performance in Q3 with EBIT and EPS exceeding expectations, the company’s guidance for Q4 sales and earnings per share is weaker than anticipated. This is largely attributed to the ongoing efforts to clean up the marketplace in North America and China, which are expected to exert pressure on sales and EPS into fiscal year 2026. Additionally, Nike’s valuation appears expensive compared to its peers, and assumptions about the profitability of the athletic apparel and footwear sectors seem overly optimistic.
While Nike’s new strategic framework, dubbed ‘Win Now,’ has shown early signs of success in balancing and driving momentum, significant work remains to achieve sustainable and profitable growth. The company has seen positive consumer response in certain categories, such as performance and everyday running, but challenges persist. The reduction in the classics franchise mix and the lowered price target to $65 reflect these concerns. Although there is potential for earnings growth if Nike can return to steady sales growth and improve its EBIT margin, the current outlook suggests caution, justifying the Hold rating.
According to TipRanks, Kernan is a 5-star analyst with an average return of 8.6% and a 51.81% success rate. Kernan covers the Consumer Cyclical sector, focusing on stocks such as On Holding AG, Dick’s Sporting Goods, and Nike.