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|  | FEBRUARY 8, 2005
 WORD ON THE STREET Merrill Downgrades Nike Analyst Virginia Genereux believes the athletic apparel company's shift to multi-branding will command a lower multiple and new management is a risk Merrill downgrades Nike NKE to neutral from buy. Analyst Virginia Genereux says that while the company's valuation appears reasonable, she sees some headwinds. She notes third-quarter earnings per share consensus looks high to her at 97 cents. She believes Nike will be negatively impacted by S&P's transition to free float index, noting Nike is the fifth biggest weight loser in market cap. She feels Nike's shift from one-brand company to multi-brand will ultimately command a lower multiple. Another risk is the uncertainty around the company's new management regime--Phil Knight may diversify his Nike holdings. She Genereux notes athletic footwear and apparel end market growth is slowing everywhere except China.  All of the views expressed in this research report accurately reflect the research analyst's personal views regarding any and all of the subject securities or issuers. No part of analyst compensation was, is or will be, directly or indirectly related to the specific recommendations or views expressed in this research report. Standard & Poor's Regulatory Disclosure Any advice, analysis, or recommendations contained in articles labeled "Insight from Standard & Poor's" reflect the views of Standard & Poor's, which operates separately from and independently of BusinessWeek Online. It is possible that BWOL may from time to time publish information that is not consistent with advice, analysis, or recommendations that are published by Standard & Poor's. Standard & Poor's and BusinessWeek Online are each units of The McGraw-Hill Companies, Inc.
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