Market Overview

Nike's Eyes Bigger Than Its Stomach? Susquehanna Downgrades

Nike's Eyes Bigger Than Its Stomach? Susquehanna Downgrades
Related NKE
Rhone Looks To Pioneer An Underserved Premium Mens Activewear Category
Analyst: Full Price Selling Is Significantly Improving At Foot Locker
Road To Financial Independence: Growing Dividends, Endless Opportunities But Limited Capital (Seeking Alpha)

Nike Inc (NYSE: NKE)'s pull model of keeping supply below demand has all but disappeared and it appears that adidas AG (ADR) (OTC: ADDYY) has successfully stolen it away.

There is now an oversupply of basketball products in North America, which will continue to pressure sales and margins according to Susquehanna analyst Sam Poser. Surprisingly, Adidas is now growing its basketball business at a rapid pace.

“Nike appears to misjudged the appetite for some key marquee basketball product which has resulted in creating a push model versus the expected pull model,” said Poser.

The analyst noted that Nike miscalculated on several basketball releases, which is taking the shine of all but the very best Nike and Jordan releases.

At the end of the fourth quarter in 2017, Susquehanna admitted they saw Nike turning the corner based on signs of improvement in basketball but has since changed its stance based on commentary from Nike’s largest wholesale accounts.

While Nike basketball certainly isn’t dead, given the amount of signature basketball shoes that remain present at factory outlets, the category may take longer than initially anticipated as excess inventory is cleared. Nike misjudgment of signature shoe releases has left them in an excess inventory glut. If there was an appetite for 500,000 pairs of a certain launch, Nike shipped 700,000, according to Susquehanna.

Amid, Nike Basketball struggles and a lack of innovation beyond the VaporMax, Susquehanna has downgraded Nike from Positive to Neutral and lowered its price target from $64 to $54.

Nike can at least rest its head on the solace that it still has the best selling shoe in America, the Tanjun.

Related Link: Adidas Jumps Over Jordan Brand To Take The No. 2 Spot In Sports Footwear

Latest Ratings for NKE

Oct 2018OppenheimerUpgradesPerformOutperform
Oct 2018HSBCDowngradesBuyHold
Sep 2018Bank of AmericaMaintainsUnderperformUnderperform

View More Analyst Ratings for NKE
View the Latest Analyst Ratings

Posted-In: Analyst Color News Downgrades Price Target Sports Top Stories Analyst Ratings General Best of Benzinga


Related Articles (NKE + ADDYY)

View Comments and Join the Discussion!

Latest Ratings

AMTDMorgan StanleyUpgrades65.0
APOMorgan StanleyDowngrades34.0
CGMorgan StanleyDowngrades23.0
EIXEdward JonesDowngrades0.0
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.

Bitcoin: Should You Invest In This Cryptocurrency?

Mickey Misunderstood: Disney Streaming Could Be Worth $30 Per Share