Market Overview

Jefferies Explains Cautious Nike Thesis

Share:
Related NKE
Rhone Looks To Pioneer An Underserved Premium Mens Activewear Category
Analyst: Full Price Selling Is Significantly Improving At Foot Locker
Nike declares $0.22 dividend (Seeking Alpha)

Analysts at Jefferies downgraded their rating on Nike Inc (NYSE: NKE) from Buy to Hold on Aug. 21 under the assumption that the competitive landscape in the athletic footwear business will make incremental share gains and margin expansion "elusive."
On Aug. 25, the analyst double-downed on his downgrade in a video sent to clients.

Nike's dominant status in the footwear space will "remain disadvantaged" by the rising popularity of adidas AG (ADR) (OTC: ADDYY), analyst Randal Konik said. This belief is based on various datasets, including web traffic data that clearly show rising search interest for Adidas while traffic trends for Nike are slipping.

Secondary sneaker market data suggests Adidas has stolen 44 percent of Nike's market share dating back to January 2015, the analyst said. Adidas has also become less promotional versus Nike in its selling activity which may add to Nike's margins concerns.

Meanwhile, a proprietary survey of athletic shoe sellers shows that Adidas was first recommended 27 percent of the time, up from just 7 percent in September, 2016. On the other hand, Nike was the first brand recommended 59 percent of the time which marks a decrease from 80 percent last September.

Finally, Nike will likely be facing SG&A headwinds from ongoing investments to "fend off" Adidas in the U.S. market, Konik added.

Related Links:

The Premium Shoe Sales Slump Is Weighing On Foot Locker

Breaking Down The Footwear Sector: Adidas Pipeline Still Strong, Under Armour Under Pressure

Latest Ratings for NKE

DateFirmActionFromTo
Oct 2018OppenheimerUpgradesPerformOutperform
Oct 2018HSBCDowngradesBuyHold
Sep 2018Bank of AmericaMaintainsUnderperformUnderperform

View More Analyst Ratings for NKE
View the Latest Analyst Ratings

Posted-In: Adidas athletic apparel Athletic Shoes Jefferies Randal Konik shoesAnalyst Color Analyst Ratings

 

Related Articles (NKE + ADDYY)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
LXFTKeyBancDowngrades0.0
CPAImperial CapitalDowngrades68.0
PRMWImperial CapitalInitiates Coverage On18.0
TGTKeyBancInitiates Coverage On110.0
QCOMMorgan StanleyUpgrades0.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

A Peek Into The Markets: U.S. Stock Futures Edge Lower Ahead Of International Trade Data

5 Stocks To Watch For August 28, 2017