Piper Jaffray analyst Erinn Murphy is out with a research report on Nike Inc (NYSE:NKE) after ultimately negative takeaways following multi-market visits in Germany, UK, and France over the past week. In reaction, Murphy downgrades NKE from an Overweight to a Neutral rating, with a price target of $58, which represents a 3% increase from where the shares last closed.
Though the analyst noted that brand and product messaging consistency throughout the board of the markets she visited globally, she remains critical of the innovation pipeline that has waned in more recent years.
Murphy explains, “While we believe in the brand long-term, the resurgence of adidas has taken a toll on Nike’s growth rate in the region. We are also seeing other competition for the brand in Europe accelerate–from the likes of Puma, New Balance and surprisingly Reebok (Classics). Unlike other brands, markdowns of Nike product were consistent across our wholesale checks. Bottom line, these competitive pressures combined with a more muted innovation pipeline for Nike currently, could weigh on Nike for the next 6-12 month period.”
“We are stepping to the sidelines and expect NKE shares to be in a period of digestion until we see evidence of new platform innovation and earnings acceleration,” she concludes.
As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, analyst Erinn Murphy is ranked #3.0978 out of 4,147 analysts. Murphy has a 39% success rate and faces a loss of 7.6% in her annual returns. When recommending NKE, Murphy loses 1.0% in average profits on the stock.
TipRanks analytics demonstrate NKE as a Buy. Based on 23 analysts polled in the last 3 months, 15 rate a Buy on NKE, while 8 maintain a Hold. The 12-month average price target stands at $64.23, marking a 14% upside from where the stock is currently trading.