Piper Sandler cuts Nike stock target to $98 from $107, stays neutral
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On Friday, Piper Sandler adjusted its outlook on Nike Inc (NYSE:NYSE:NKE), reducing the athletic apparel and footwear giant’s price target from $107.00 to $98.00. The firm retained its Neutral stance on the stock. The revision reflects concerns over near-term sales due to changes in product lifecycle management as Nike shifts focus towards product innovation and reinvesting in its wholesale operations.
Nike is reportedly scaling back the supply of some of its key product lines, including the popular Air Force 1, in favor of introducing new products. Piper Sandler anticipates that this strategy will balance out new product growth in the first half of the year, but also acknowledged that it could put pressure on Nike’s short-term financial results.
The firm expressed caution regarding the company’s growth rate following this period of transition, citing a lack of precedent for the new products.
The strategy to reduce supply of certain franchises while ramping up new offerings is part of Nike’s broader aim to refresh its product portfolio with innovative items. However, this approach is expected to challenge the brand’s near-term performance, as the company navigates the transition.
Additionally, Nike’s plan to reinvest in the wholesale channel is likely to impact its operating margin targets, which have been in the high teens. Piper Sandler’s maintained Neutral rating signifies a wait-and-see approach to the company’s stock, reflecting uncertainty about the outcome of Nike’s strategic adjustments on its financial performance.
