Nike’s (NKE) stock has underperformed peers due to earnings downgrades and lower valuations, and relies on a return to positive revenue growth, which is not expected until early 2025, RBC Capital Markets said in an earnings preview Friday.
The firm said Nike’s current valuation is more attractive and will remain stable until management reveals the company’s future product plans and strategies.
Further details of product range transition, including timing, new products and category strategy, will be important, according to RBC.
RBC said it expects revenue to grow 1% to $13 billion and diluted earnings per share of $0.72 for fiscal Q4, the results of which are scheduled for release in late June. For fiscal year 2024, RBC said it now expects a 1% revenue growth because of foreign exchange translation. For fiscal year 2025 organic revenue guidance, RBC said it lowered its estimate to 2% growth from 4%.
“Nike’s de-rating is partially helpful, however relative to its near-term growth prospects (both absolute and relative) we believe it is not yet compelling enough,” the firm added.
RBC reiterated its sector perform rating on Nike’s stock and kept the price target at $100.