Nike stock pulls back as Wall Street has low expectations for Tuesday earnings

• Nike stock sheds weight day before quarterly earnings.
• Nike will release fiscal Q1 earnings after the market close on Tuesday.
• In June, management set expectations low for Q1.
• Analysts are generally skeptical of NKE, some expect Nike to cut full-year outlook.

 

The market isn’t expecting much from Nike’s (NKE) August quarter when it reports after the close on Tuesday. Shares of the vaunted footwear brand slid 1.2% in Monday’s session. 

The Dow Jones Industrial Average (DJIA) started the week on the backfoot, trading 0.4% lower as the NASDAQ and S&P 500 followed suit in the morning session. However, a speech from the head of the central bank stirred animal spirits, and the DJIA ended the session slightly ahead.

On Monday, Federal Reserve (Fed) Chair Jerome Powell said in a speech that he expected there to be two more 25 bps rate cuts this year. This announcement reduced bets on a 50 bps cut at the November meeting but made further cuts much more certain.

Much of the wider market is looking ahead to the Nonfarm Payrolls report for September that gets released on Friday. The report will shed light on the US economy and the recent slowdown in job growth.

Nike stock earnings preview

Wall Street expects Nike to earn $0.53 in adjusted earnings per share (EPS) for its first fiscal quarter of 2025, which ended in late August. This amounts to a 44% reduction from a year ago.

Likewise, the $11.65 billion in revenue expected on the Street is a 10% decline from a year earlier.

The vast majority of analysts covering the stock have downgraded their earnings outlook in the past 90 days. This is largely due to Nike itself cutting its outlook for Q1 back in June. Analysts think that rising competition and a consumer base that is reeling in spending might be the culprits.

Hedge funds like Pershing Square have been buying up shares in recent months, which has thrust the share price from the low $70s back to the high $80s. But that is nothing like the $120s of 2023 or 2021’s $170s.

Analysts have been skeptical to say the least. Morgan Stanley has gone as far as to estimate that executives will reduce their annual outlook during the earnings call on Tuesday.

"While NKE is the global athletic market leader with diversification across product categories, geographies, and distribution, we see an elongated timeline for NKE to re-accelerate revenue growth in the midst of a franchise product lifecycle transition with the global macro backdrop further complicating the path forward," wrote JPMorgan analyst Matthew Boss.

At the very least, the market should be excited to meet the new CEO Elliott Hill, who is a longtime veteran of Nike but just took over the top spot in September.

Nike stock forecast

Nike stock has been looking better on the daily chart since reaching a 2024 nadir near $71 in July and August. NKE stock rose briefly above $89 last week, which was support as recently as April.

The next resistance target is $98, which pushed the Nike stock price action lower on two occasions in June. A break above $98 will mean the worst of the long-term downtrend is over.

The 50-day Simple Moving Average (SMA) is trending beneath the 100-day SMA, which itself is below the 200-day SMA. This proves the long-term downtrend, but the 50-day SMA has at least been reducing the space between it and the 100-day SMA. A crossover there will tell traders that the turnaround has legs and that it's time to enter.

NKE daily stock chart