Nike shares ‘too expensive’ as analyst sees stock dropping 20%

Ahead of Nike Inc. reporting earnings next week, one Wall Street analyst has a message for investors: “Sell the stock.”

Williams Trading analyst Sam Poser cut his price target on Nike to $75, matching a Street low, saying in a note to clients that he doesn’t expect the sneaker and athletic apparel maker “to get itself out of its current doldrums as it has when it faced challenges in the past.”

Poser said the stock is “too expensive” and he does not expect the company to do anything to “deserve its current multiple.” His price target implies a more than 20% drop from Tuesday’s closing price. Nike, which is due to report fourth-quarter results on June 27 after market close, rose as much as 1.4% to $96.09 on Thursday in New York.

“The bloom is off the Swoosh,” he said in the note. Poser is one of three analysts to have a sell-equivalent recommendation on the stock, according to data compiled by Bloomberg.

The company’s current senior executives do not have “the instinct and experience that the prior team had,” said Poser, who flagged the loss of several employees — mostly through layoffs — that had “strong talent” and “great Nike institutional knowledge.”

The lack of talent has led to a “push model,” as well as increased discounting, Poser said, noting that loyal customers were unwilling to pay full price for Nike products despite liking the brand.

“Jordan Retro sell through rates have fallen off, and many retailers have begun to promote those items that did not sell, which would have been unheard of just a few years ago,” he added. “If Nike is to get out of its own way, it won’t happen until calendar 2026, in our view, if it does at all.”

Once a favorite, Nike has been losing fans as it grapples with competition from the likes of On Holding AG, Deckers Outdoor Corp.’s Hoka and Adidas AG.  Citi analysts led by Paul Lejuez said in a note Thursday that Adidas is continuing to gain ground on Nike in North America, China and Europe.

While Nike is trying to regroup, Adidas is “getting its act together,” with the company redeploying its Originals range of shoes in what seems to be a “strategic manner,” Poser said. Meanwhile, further checks suggest new products from Adidas in running and basketball, planned for later this year, will be well received.

“Unlike Adidas, which allowed its heritage Originals to become stagnant and is now reviving them, Nike is pulling back on core heritage product, and does not have much compelling new product in its pipeline,” Poser said.