Why Is Nike (NKE) Stock Rocketing Higher Today

What Happened?

Shares of athletic apparel brand Nike (NYSE:NKE) jumped 5.4% in the morning session after Jefferies analysts upgraded the stock's rating from Hold to Buy and raised the price target from $75 to $115. The analysts added "CEO Hill is tackling product and distribution issues head-on, positioning the brand to again outgrow the market and take back lost share. Survey work illustrates NKE's brand remains very strong, proving that issues were self inflicted and competitive threats less severe."

After the initial pop the shares cooled down to $80.19, up 4.8% from previous close.

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What The Market Is Telling Us

Nike’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business. 

The biggest move we wrote about over the last year was 8 months ago when the stock dropped 19.6% on the news that the company reported weak second-quarter earnings results. Unfortunately, its constant currency revenue missed. The company recorded weaknesses in its Lifestyle brand, especially in the Digital channel. Notably, digital channel sales declined 10% due to softer traffic, higher promotions, and lower sales of certain classic footwear franchises. Management cited these issues, in addition to macro headwinds (especially in China) and unfavorable FX, as the reasons for revising FY'25 guidance. Nike now expects fiscal 2025 sales to be down mid-single digits. Sales in the first half (1H'25) are expected to be down high single digits (vs. previous guidance for low single digits decline). Precisely, revenue is expected to be down 10% in Q1'25, given most of the challenges called out during the earnings call. Overall, this was a bad quarter for Nike.

Nike is up 8.9% since the beginning of the year, but at $80.19 per share, it is still trading 23.7% below its 52-week high of $105.15 from February 2024. Investors who bought $1,000 worth of Nike’s shares 5 years ago would now be looking at an investment worth $836.10.

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