What’s going on with Nike stock
To summarize, Wednesday was not the greatest day in history for Nike to have its price target slashed, but that was why Nike stock fell. The price target cut for top athletic apparel maker Nike (NYSE:NKE) led to shares closing 5.6% lower. That’s a steeper drop than even the S&P 500 (^GSPC) stock index, which saw a 4% decrease.
Why we care
Lorraine Hutchinson, a Bank of America (NYSE:BAC) Securities Analyst, was the one wielding the knife. She reduced her estimate for Nike stock by $15 per share, from $140 to $125, in a post on Wednesday morning. The shares still have a neutral recommendation from Hutchinson, but not because of this little change.
The reasons for the Bank of America predictor’s change weren’t immediately clear.
Nike investors may be concerned about a recent Financial Times article published Tuesday. The report indicates that the company’s chief talent, diversity, and cultural officer Felicia Mayo is leaving her job at the end of July, according to an internal company email and “people familiar with the matter”.
According to the British newspaper, she will be the second executive to depart in as many years. While Nike hasn’t had a reputation for having a high level of top management turnover, some people might be concerned about Mayo’s apparent resignation, implying some dissatisfaction or dissent among the C-suite.
Neither of these factors, while not particularly good, is severe enough to justify a nearly 6% dive in Nike’s price.
To be fair, we have to consider it in the context of everything else. Wednesday was a particularly devastating day for investors. Not just because of retail giant Target’s (NYSE:TGT) poor quarterly results but also because of its prior lofty trajectory. As a result, many retail and consumer discretionary companies were sold off, at times significantly. In that case, Nike was the victim of bad timing.