Nike Slumps on China Sales Weakness, Analysts Cut Price Targets
June 29, 2022
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Nike’s($NYSE:NKE) shares slid in premarket trading on Tuesday after the company posted weaker-than-expected sales in China for its fiscal fourth quarter. On Wall Street, analysts reacted to the news by cutting their price targets for Nike’s stock, but maintained a generally positive outlook for the company’s performance over the next year. The Chinese government has also been cracking down on spending by its citizens, which has led to a slowdown in the country’s luxury market. Despite the challenges in China, Nike continues to perform well in other markets around the world.
VI Analysis
The company’s fundamentals reflect its long-term potential. The below analysis on Nike is made simple by the VI app. The VI Star Chart shows that Nike is strong in assets, profitability, growth, and dividends. Nike has a high health score of 8/10 with regard to its cash flows and debt, and is capable of paying off debt and funding future operations. Nike is classified as a ‘gorilla’, a type of company that achieved stable and high revenue or earning growth due to its strong competitive advantage. At the right price, it is suitable for those who want to invest for high capital gains. High growth companies are deemed more risky as they attempt to grow faster.
Summary
Nike’s shares have taken a hit following news of weak sales in China, with analysts cutting their price targets for the stock. Nike has been struggling in China as consumers there shift to cheaper, local brands. The company is also facing increased competition from Adidas and Puma. Many analysts are predicting that Nike’s shares will continue to struggle in the near-term as the company faces headwinds in China. However, some believe that Nike is still a strong long-term investment due to its strong brand and global reach.
