KeyBanc reiterates Sector Weight on Nike stock amid transformation

KeyBanc has retained its Sector Weight rating on Nike Inc. (NYSE:NKE) following the company's first-quarter results and the announcement of a multi-year operational transformation strategy. Nike reported mixed first-quarter results, with strengths in Sports Offense offset by weaknesses in Sportswear, Greater China, and Jordan. The stock has experienced a 43% decline year-to-date, trading near its 52-week low of $35.02.

Nike has outlined a strategy called Pace, which aims to generate approximately $2.5 billion in cost savings and complete by fiscal year 2031. This transformation includes reducing supply and cleaning up distribution. Analyst Ashley Owens has adjusted estimates in line with the new guidance while maintaining the Sector Weight rating.

Eight analysts have revised their earnings downwards, but the Fair Value analysis suggests the stock could be undervalued. Nike's earnings per share exceeded expectations, but revenue fell short of estimates, which were about 25% higher. The company's new CFO lowered the fiscal 2027 outlook due to these results. Several firms, including Bernstein and Guggenheim, have reduced their price targets due to guidance and revenue concerns.

However, Bernstein maintains an Outperform rating, while other firms hold Buy and Equal Weight ratings. Wells Fargo believes the Pace cost initiative will not contribute significantly until fiscal years 2029 and 2030.