Williams Trading analysts downgraded Nike (NYSE:NKE) to Sell from Hold, reducing the price target from $92 to $85.

The analysts explained the downgrade by highlighting a shift in Nike’s operational approach, noting the company’s move away from its previously self-critical nature. They criticized the company’s leadership for being overly rigid and not open to diverse opinions.

Additionally, the analysts observe that financial objectives are overshadowing merchandising strategies, diverging from the innovative spirit that propelled Nike’s growth.

With Nike set to announce its Q3/24 earnings on March 21, the analysts anticipate a shortfall in performance and a potential reduction in the fiscal 2024 outlook. The analysts argue that Nike’s valuation no longer justifies its historic premium due to declining franchise vitality.

The analysts identify several factors contributing to Nike’s challenges, including underperforming new releases, prioritization of sales over brand integrity, insufficiently compelling product innovations, and an overestimation of market reception for new styles like the upcoming AirMax DN.

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