Nike Stock Draws Heavy Retail Buzz Ahead Of Q3 Earnings This Week: Here's What Analysts Expect

Retail chatter around Nike Inc (NKE) has shot up in recent days, ahead of the company’s quarterly report later this week which will give clues on an ongoing turnaround effort.

User posts on Stocktwits about Nike have increased by 339% in the past week alone. However, sentiment has tracked in the ‘bearish’ zone for about a month now, and recent comments are mixed.

The iconic brand behind the Air Jordan and Air Force 1 has had a challenging last few years, following a series of missteps, including an ill-fated direct-to-consumer sales strategy.

Nike’s revenue was flat in FY24 (ended May 2024) and is forecast to drop 10.4% in the current fiscal year, according to Koyfin data. Its shares are down more than half from their peak in November 2021.

The company responded by cutting jobs and, late last year, brought veteran Elliott Hill back as its CEO. In December, Hill said Nike would focus on its core areas such as basketball and running and push premium products.

So far, the effort hasn’t given significant results, according to analysts.

Morgan Stanley and Goldman Sachs cut their price targets, albeit marginally, on Nike shares last week, according to The Fly.

The former said Nike could report Q3 earnings per share and a Q4 EPS forecast in line or above market expectations, but the performance is already priced in the shares. The research firm cut its Nike price target to $74 from $72, while maintaining an ‘equal weight’ rating.

Goldman Sachs said that while there have been some improvements, Nike’s turnaround effort is still in its early days. The brokerage cut its estimates for Nike’s EPS in FY26 and FY27 and price target on shares by $1 to $90 while maintaining a ‘buy’ rating.

On Stocktwits, a user noted that Nike’s price-to-free cash flow is the lowest in years at 17x, which creates a buying opportunity.

Another user said the stock could see a 9% swing on either side after the earnings report.

Nike will announce third-quarter results after the markets close on Thursday. Analysts expect an 11.4% drop in sales — the worst decline in the last five quarters — and a 70.6% drop in adjusted earnings per share (EPS), according to Koyfin data.

Shares of Nike are down 6% year to date.

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