Nike Shares Face Downward Pressure as Needham Cuts Earnings Estimates

Nike shares continue to face challenges as Needham & Co reiterates its Hold rating on the stock and lowers earnings estimates ahead of the company's fiscal first-quarter results. Analyst Tom Nikic points to soft demand trends, high inventory levels, intense promotional activity, and unfavorable competitive dynamics as reasons for his concerns.

Nikic notes that two negative developments have emerged since Nike's fourth-quarter earnings call in late June. First, US back-to-school demand weakened, leading to missed sales targets and lower guidance at Dick's Sporting Goods, which owns Foot Locker, and at JD Sports. Second, two key wholesale partners in China announced they would stop selling Nike products online.

As a result, Needham lowered its fiscal 2027 earnings per share forecast to $1.64 from $1.74 and cut its fiscal 2028 estimate to $1.80 from $2.00. The firm does not have a price target on the stock. Nikic believes that the 'path of least resistance' for Nike shares could remain downward due to a tough market and his expectation that earnings forecasts will continue to fall.