Nike Pulled From the Game; Tractor Supply Poised to Fly: Street Calls of the Week

investing.com:

Here is your Pro Recap of the top takeaways from Wall Street analysts for the past week: upgrades for Teradyne, XPO Logistics, Tractor Supply, and Brinker International, and a downgrade for Nike.

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What happened? On Monday, Jefferies downgraded Nike (NYSE:NKE) to Hold with a $100 price target.

What’s the full story? Jefferies wrote that Nike’s wholesale channel is expected to face pressure due to tight inventory management, which is likely to reduce replenishment orders. Despite the company’s focus on increasing direct-to-customer (DTC) sales penetration, the current consumer environment could delay margin expansion, according to Jefferies. Their analysts wrote this puts Nike’s FY 2025 target of high-teens operating margin at risk.

Jefferies furthermore believes growth in China could be challenging due to potentially inconsistent macroeconomic headwinds and sales trends in this region due to a recent slowdown in apparel retail sales. Jefferies' forecast for fiscal 2024 is growth of 7%, lower than the consensus of 12%, per Jefferies' note.

Jefferies' survey results indicate a potential slowdown in US consumer spending, particularly in apparel/accessories and footwear. The analysts deduced from their survey also that most US consumers with student debt are concerned about meeting their monthly expenses, and a significant percentage plan to reduce spending on apparel/accessories and footwear. This could put further pressure on US consumer spending and contributes to the Hold recommendation.

A Hold at Jefferies “Describes securities that we expect to provide a total return (price appreciation plus yield)