NIKE Outlook - A Bearish Technical Picture Amid Mixed Analyst Sentiment

Market Snapshot

NIKE (NKE) is in a weak technical state with a recent price decline of -5.65% and a poor internal diagnostic score of 2.18, suggesting investors should exercise caution. Analysts remain divided, with one "Strong Buy" rating from TD Cowen, but overall market expectations are neutral to bearish.

News Highlights

Recent news has largely overlooked NIKE, with headlines dominated by luxury real estate and vehicle developments. Here's what could matter:

• Washington State's New Luxury Aircraft Tax: The 10% tax on noncommercial aircraft over $500,000 could impact wealthy consumers, but its direct effect on NIKE is indirect.
• Hyatt Launches Unscripted by Hyatt: This new luxury brand highlights growing demand for premium travel experiences, which may reflect broader consumer trends but doesn't directly impact NIKE's footwear or apparel markets.
• Trump's Trade Policies: The article mentions how protectionist policies are reshaping global trade, potentially affecting NIKE's international supply chains and consumer spending. Yet, no direct guidance is provided for investors.

Analyst Views & Fundamentals

Analysts remain disconnected in their views, with one analyst (John Kernan from TD Cowen) issuing a "Strong Buy" rating in mid-September. However, this analyst's historical success rate is low at 33.3%, suggesting limited confidence in their recent bullish stance.

• Average Rating Score: 5.00 (simple mean) and Weighted Rating Score: 2.31 (performance-weighted), showing significant divergence from the recent "Strong Buy" rating.
• Ratings Consistency: Dispersed and inconsistent, with "Strong Buy" standing alone in a weak overall market context.
• Price Trend Alignment: The recent price trend is negative (-5.65%), conflicting with the bullish analyst rating. This suggests the market may be overrating the company’s near-term potential.

Key Fundamental Values:

• EV/EBIT: 33.69 (internal diagnostic score: 2.18)
• NPM (Net Profit Margin): 9.41% (score: 3.76)
• Cash-UP: 0.99 (score: 6.76)
• Long-term Debt to Working Capital Ratio: 0.92% (score: 4.04)
• Net Profit Attributable to Parent: 100.00% (score: 3.00)

Money-Flow Trends

Big-money flows are showing negative sentiment for NIKE, with large and extra-large institutional investors pulling back. Small investors are slightly positive, but overall inflow ratios remain weak:

• Small Inflow Ratio: 50.61%
• Medium Inflow Ratio: 49.99%
• Large Inflow Ratio: 48.97%
• Extra-Large Inflow Ratio: 46.26%

With an overall internal diagnostic fund-flow score of 7.65, the market appears cautious, though retail sentiment remains slightly positive. This divergence suggests uncertainty in the market's direction.

Key Technical Signals

Technically, NIKE is struggling with a weak chart pattern and a low internal diagnostic score of 2.18, signaling caution for traders.

• Williams %R Oversold has been frequently observed from September 5 to September 12, but its performance is mixed (46.38% win rate, -0.56% average return). This indicator is scored at 2.18, suggesting limited reliability in predicting near-term recovery.
• Recent Indicator Activity: The last five days have seen repeated triggers of Williams %R Oversold, indicating overbought conditions have not resolved and the stock is likely in a consolidation phase.
• Trend Quality: The bearish signals (1) clearly outnumber bullish ones (0), and the market is currently in a weak state. Technical momentum is weak, and there is a high risk of further decline.

Conclusion

Given the weak technical indicators, negative price movement, and mixed analyst views, we recommend investors to consider avoiding NIKE at this time. The internal diagnostic score of 2.18 is a red flag, and the recent price decline of -5.65% suggests the market may be overcorrecting. Watch for any potential earnings surprises or positive news that could reverse the current bearish sentiment, but for now, caution is warranted.