Nike Stock Plunges As Weak China Sales Guidance Rattles Investors

Shares of Nike Inc (NYSE:NKE) tanked in early trading on Wednesday, despite the company reporting upbeat fiscal third-quarter results on Tuesday. Here are the key analyst insights: BTIG analyst Robert Drbul maintained a Buy rating, while reducing the price target from $90 to $75. Telsey Advisory Group analyst Cristina Fernández reiterated a Market Perform rating, while cutting the price target from $65 to $55. Guggenheim Securities analyst Simeon Siegel reaffirmed a Buy rating, while lowering the price target from $77 to $74. Needham analyst Tom Nikic maintained a Hold rating on the stock. Check out other analyst stock ratings. BTIG: Nike reported quarterly revenue of $11.3 billion with earnings of 35 cents per share, beating expectations of 26 cents per share, Drbul said in a note. Gross margin contracted by 130 basis points (bps) year-on-year to 40.2%, coming under pressure due to tariff costs in North America, he added. Nike's margins could inflect positively in the second quarter of fiscal 2027, "as the company laps tariff pressures," the analyst stated. "We continue to see significant margin recovery opportunities in FY27 and into FY28," he further wrote. Telsey Advisory Group: Nike's sales and operating margin came in slightly ahead of consensus estimates, Fernández said. Sales remained flat year-on-year, which was above guidance of a low-single-digit decline, due to growth of 3% in North America and only a 10% decline in China versus expectations of a 16% decline, she added. Nike cited weak sales in the EMEA (Europe, the Middle East, and Africa) region and that it would need to take "more aggressive markdowns," the analyst wrote. Management guided to revenues down 2%-4% in the fourth quarter, while lowering their fiscal 2026 earnings projections from $1.51 per share to $1.49 per share, she further stated. Guggenheim Securities: Nike reported sales of around $11.3 billion, beating Street expectations, Siegel said. While the company's performance in China was better than feared, that in EMEA was worse than expected, he added. Management "sounded confident" in their ability to achieve a recovery in business in the new calendar year, the analyst stated. "We believe we have begun seeing the signals of turn in N.A. and now the path to stabilization in China," he further wrote. Needham: Nike's turnaround could take longer than expected, as the external environment "is highly challenging," Nikic said. Management expects revenues to continue declining and inflect only by the end of the year, although earnings may remain flattish during this time, he added. While revenues in North America grew 3%, international trends remain challenging and China continues to be "a pressure point" due to "unhealthy inventory levels," the analyst wrote. Nike did indicate that performance styles continue to perform very well, with new styles resonating with customers, he further stated. NKE Price Action: Nike shares were down 14.45% at $45.18 at the time of publication on Wednesday. The stock is trading at a new 52-week low, according to Benzinga Pro data. Photo: Shutterstock