Nike Drops as Xinjiang Rights Protests May Hurt: Citi By Investing.com

By Christiana Sciaudone

Investing.com — Nike (NYSE:NKE) dropped 2.4% after Citi downgraded shares on a demand slowdown.

Citi’s Paul Lejuez downgraded the sports retailer to neutral from buy and lowered the price target by $20 to $140 on pressure amid accusations of forced labor in Xinjiang that boiled up again recently, StreetInsider reported. Nike said in an undated statement that it does not source products from the region and has confirmed with contract suppliers that they are not using textiles or spun yarn from the region.

Nike had been rallying as demand for gear jumped over the pandemic period, and shares are still up about 50% over the past 12 months. But rights groups have called for bans on the brand, along with others like H&M, saying that Xingjiang’s Uyghur minority are forced to pick cotton.

Lejuez has a positive long-term outlook on Nike, but the analyst listed 10 reasons he lowered his rating, including the labor issue, as well as elevated inventory, higher markdown risks, and lower margins. 

Shares are also trading at a higher valuation than its historical average, Lejuez said.