Truist Securities has revised its outlook for Nike and Dick's Sporting Goods, downgrading both to hold from buy. The price target for Dick's has been significantly reduced from $270 to $135, suggesting a modest upside of nearly 9% from its recent closing price. Similarly, Nike's target has been cut from $47 to $42, indicating a 6% potential increase.
Analyst Joseph Civello expressed concerns about severe headwinds affecting both companies, particularly following a nearly 31% drop in Dick's shares after a disappointing fiscal second-quarter report. The analyst highlighted the interconnectedness of the two firms, noting that Nike-branded shoes account for 35% to 40% of Dick's merchandise.
If Nike fails to generate consumer demand with future product launches, Dick's could face additional challenges. The sporting goods market is described as highly competitive and fragmented, with potential pricing pressures and elevated inventories posing risks to sales and margins.
Truist's downgrade of Nike aligns with broader market sentiment, as 24 out of 42 analysts have a hold rating on the stock. However, the downgrade for Dick's contrasts with the consensus, where only nine out of 29 analysts recommend a hold. Year-to-date, Nike shares have declined by 38%, while Dick's has fallen by 37%