Nike gets downgraded and announces exit from Russia; What’s next for NKE stock?

Nike gets downgraded and announces exit from Russia; What's next for NKE stock
3 months ago
3 mins read

It seems as if the U.S. sportswear giant Nike (NYSE: NKE) is exiting Russia completely, three months after suspending operations in the nation.

Notably, Nike is one of the last global brands to exit Russia, announcing the news came through an email statement, Reuters reports.

Meanwhile, ahead of its earnings release on June 27, the company is receiving more skeptical reviews from Wall Street analysts, as Seaport Research Partners downgraded the stock to neutral on June 22. Preceding this downgrade was a critical note by Morgan Stanely’s analyst Alex Straton who is expecting more trouble for Nike in China and things to get worse before they get better.     

“While [fiscal 2023] EPS may fall below [the long term] plan on supply chain/macro headwinds, the [long term] opportunity remains intact,” he concluded. “The long-term opportunity is the same to us, though 2023 could be another ‘transition’ year before NKE gets back on track [with long term] targets.”

NKE chart and analysis 

In the meantime, since December 2021, the shares of the company have been in a downward momentum with unusual trading volume spikes in March and the second part of May. Right now, shares are below all daily Simple Moving Averages (SMAs), trading choppily between the $100 and $120 range.  

NKE 20-50-200 SMA lines chart. Source. Finviz.com data. See more stocks here.

Nevertheless, TipRanks’ analysts rate the shares a moderate buy, predicting that in the next 12 months the shares could reach an average price of $143.94, 36.33% higher than the current trading price of $105.58.

Wall Street NKE analysts’ price targets for NKE. Source: TipRanks

Currently, the sentiment for Nike doesn’t seem to be too hot, as the shares are down over 35% year-to-date (YTD), while the likes of Morgan Stanley and Seaport Research Partners pile on to reiterate their neutral stance or downgrade the company’s shares. 

Whatsmore, the macroeconomic conditions are not ideal; with a possible recession on the horizon, consumers could decide to cut back on athletic apparel. 

Similarly, slowdowns in China due to the more recent Covid-related lockdowns have seen supply chains stressed and consumers only buying the necessities. Investors should be cautious and seek possibly better entry points with more volatility in the stock likely ahead.   

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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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Dino Kurbegovic

Dino is an investor and technology enthusiast with years of experience in managing complex projects. At Finbold he covers stories on stocks, investing, micro and macroeconomic trends. Also, he’s also building a micro solar power plants in his hometown.