Wells Fargo’s recent checks point to near term risk for Nike

Wells Fargo maintained an Overweight rating on Nike (NYSE:) shares but cut the price target to $120 from $130 in a note on Monday.

The analysts said the firm is also lowering numbers below the street consensus as recent checks point to a near-term risk for the sportswear brand.

“Sentiment continues to drift lower as we gear up for NKE’s 1Q print, where we expect to hear more bad than good news,” they wrote. “Following lateral reads/industry checks, we believe Street numbers could again move lower.”

“On top of weaker US retail reads, our recent industry checks with manufacturers and Chinese retail partners point to a slower global demand backdrop relative to 3 months ago (most notably out of China),” the analysts added.

They also noted Nike’s US market that remains bloated on inventory and a worsening FX picture. As a result, the firm cut its FY24 revenue/EPS for Nike. It now sees FY24 revenue at +2.5%, down from +4.7%, with FY24 EPS now seen at $3.60, below the Street consensus of $3.72.

On the positive side, the analysts said US markdown levels appear “no worse than expected thus far.”