Nike 'Brand Heat' Not Enough, Analyst Says: 'Timeline Is Uncertain At Best'

Nike Inc's (NKE) turnaround is progressing more slowly than was earlier anticipated, according to Needham.

The Nike (NKE) Analyst: Analyst Tom Nikic downgraded the rating from Buy to Hold rating, while keeping the price target unchanged at $68.

The Nike Thesis: The company has been aggressively selling to the North American wholesale channel. That’s a key part of its turnaround strategy, but it could prove to be a "potential strategic misstep," Nikic says.

Check out other analyst stock ratings.

The "brand heat" is not enough to support that level of sell-in, which could lead to near-term challenges, he added.

"Additionally, challenges in China and the Converse brand appear very intense and the timeline to get those businesses back on track is uncertain at best," the analyst wrote.

The consensus estimates appear "too aggressive on the pace of recovery," resulting in downside to the current numbers, he further stated.

The stock has climbed almost 15% after hitting a bottom just after Nike's (NKE) earnings release, outperforming the 1% gain in the S&P 500 index, Nikic noted.

NKE Price Action: Shares of Nike (NKE) had risen by 0.02% to $65.26 at the time of publication on Friday.

Image: Shutterstock