Tuesdays are often the busiest day for Wall Street analysts to reveal their rating changes, and today was no exception. Unfortunately for shareholders of Nike Inc NKE, it was a downgrade from Barclays. The price action following that downgrade makes it the PreMarket Prep Stock of the Day.
Nike's Recent Price Action: Similar to the S&P 500 index, it was a bad week for the issue. After peaking last Monday at $113.36, it backed off to end the session at $112.38, The issue was hit much harder than the index, shedding $6.66 or 6% to close at $105.72 on Tuesday.
It was in the red in two of three sessions to end the week, making its low for the week on Friday ($103.25) and ending the week at $104.12.
It caught a bid with the broad market on Monday after matching Friday’s low and advanced $3.09, or 2.9%, to close at $107.21. That matched the close for its rebound in Wednesday's session.
The Ax: Before the open Tuesday, Barclays analyst Adrienne Yih downgraded Nike from Overweight to Equal-Weight and lowered the price target from $125 to $110.
That was the second downgrade of the issue in the last month. The other one came on Aug. 9 from Exane BNP Paribas, which lowered its rating on the issue from Outperform to Neutral with a $118 price target.
PreMarket Prep's Take On Nike: When the issue was being covered on the show Tuesday, it was already trading in the red by nearly $3 in the lower $104 handle.
Co-host Dennis Dick did not hesitate with his technical take.
“It has to hold $100 — you are not going to see it today — but that is the level it needs to hold.”
The author of this article alerted traders to a potential support area ahead of $100 and a pair of lows from the last two sessions at the $103.30 area. Those lows were easily breached in the first 5 minutes of the session.
NKE Price Action: After a much lower open ($103.82 vs. $107.12), Nike attempted to rally, only reaching $104.44, and then resumed its move lower.
The ensuing decline breached the pair of lows at the $103.30 area, with Nike falling to $102.25. That marks the lowest level for the issue since it bottomed on July 14 at $101.86.
The stock ultimately lost 4.46% Tuesday, closing at $102.42.
The Nike discussion from Tuesday’s show can be found here:
Photo via Shutterstock.
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