AP News

Ahead of the Bell: Analyst cuts Nike price target


NEW YORK (AP) — An analyst reduced Nike's price target on Friday, concerned about a slowdown of future product orders in places like China.

Late Thursday the world's biggest athletic shoe and clothing company reported that its first-quarter net income fell 12 percent as a boost from higher sales was offset by increased costs and ad spending. While its results topped Wall Street's expectations, worries about future order prospects seemed to overshadow the performance.

Kate McShane of Citi Investment Research trimmed Nike Inc.'s price target to $100 from $101. Nike shares finished at $96 per share on Thursday before the earnings report. They are down 16.4 percent from a 52-week high of $114.81 in early May.

In a client note, the analyst said that the company's first-quarter global future product orders slowed faster than expected and will likely continue to slow further.

McShane says Nike's future product orders for China were softer than expected and that pressure from the region will probably continue as the company works through excess inventories.

Sam Poser of Sterne, Agee & Leach says that Nike has an oversupply of clothing inventory in China and that weakness in the country will likely continue for at least the next six months. The analyst says that while Nike's footwear is well accepted in China, its clothing is not held in the same regard there as it is in the West.

"Nike will need to work with its partners in China to reset the standards for both product and presentations," he wrote.

Both McShane and Poser kept "Neutral" ratings on Nike shares.


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