Tuesday, RBC Capital adjusted its outlook on Nike Inc (NYSE:NKE), lowering the price target to $110 from $120 while still keeping an Outperform rating on the stock. The firm pointed to the updated revenue growth expectations for the third quarter of fiscal year 2024, which are now set at low single-digit growth.
This new projection is seen as not overly ambitious and likely to reduce the risk of a full-year 2024 earnings guidance cut.
The analyst from RBC Capital acknowledged that Nike is facing increasing competition and is in the process of updating its product range. Despite these challenges, the firm expressed confidence in Nike's ability to execute its business plan effectively. The analyst also cited potential gross margin benefits and Nike's strong marketing capabilities as reasons for the positive outlook on the company.
According to RBC Capital, Nike's valuation now appears more attractive compared to its recent historical performance, with the stock trading at 24 times forward twelve months (FTM) price-to-earnings (P/E). This valuation, coupled with the company's robust marketing presence, positions Nike as a relatively defensive option within the sporting goods sector.
The price target adjustment reflects a reassessment of Nike's near-term financial prospects but maintains a positive long-term perspective on the company's stock.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.