Every earnings season has its share of overreactions, as stocks can go beyond both up and down trends. Fear of missing out (FOMO) can trigger panic and a jump mentality where emotions lead to massive overreactions. Investors can develop FOMO when they think a stock is going up, and they don’t want to miss the ride. However, investors can also develop FOMO when they worry that their stocks are falling too much and rush to the exit to try to limit losses. Often times, these types of overreactions create opportunities for investors who have been patiently waiting for a better entry. Here are two stocks that may provide buying opportunities on the way down for bullish investors.
Nike: Former CEO returns to lead transformation
Nike today
(As of 12/23/2024 at 05:45 PM ET)
- 52 week range
- $70.75
▼
$109.96
- Dividend yield
- 2.08%
- P/E ratio
- 21.99
- Price target
- $89.58
The famous shoe and sportswear maker Nike company New York Stock Exchange: OF 2024 has been a tough year, with its stock trading down 29% as of December 21, 2024. The consumer discretionary company scuppered its strategy to bolster its direct-to-consumer (DTC) channel by alienating wholesalers like Foot Locker Company New York Stock Exchange: Florida. Competitors love Ali Holding AG New York Stock Exchange: Honor Hoka owned by Decker Outdoor Company New York Stock Exchange: Decktook the opportunity to seize market share, resulting in double-digit growth while Nike suffered a downturn.
Coupled with weak sales in China and tightening consumer spending in North America, Nike has suffered from sluggish sales in its DTC, wholesale and digital channels. Its CEO resigned after reporting a quarter of the kitchen sink, taking a downturn to make way for former CEO Elliott Hill to come out of retirement to lead the turnaround on October 14, 2024.
The Q2 fiscal 2025 earnings report wasn’t too bad; The steering drowns the stock
Hill, who previously worked at Nike for 32 years, oversaw its first earnings report since his return. For the second quarter of fiscal 2025, Nike reported earnings per share of 78 cents, beating consensus estimates by 15 cents. Revenue fell 7.7% year over year to $12.35 billion, beating consensus estimates of $12.11 billion. Nike brand revenue fell 7% year over year to $12 billion. Nike Direct revenue declined 13% year-over-year to $5 billion, driven primarily by a 21% year-over-year decline in NIKE Brand Digital and a 2% decline in Nike-owned stores. Wholesale revenue fell 3% year over year to $6.9 billion. North American revenues decreased 3% year over year. EMEA revenues declined 7% year-on-year. Asia Pacific and Latin America revenues declined 3% year over year. China revenue fell 8% year over year.
Nike stock forecast today
$89.58
16.70% upModerate purchase
Based on 29 analyst ratings
| High expectations | $120.00 |
|---|---|
| Average expectations | $89.58 |
| Low expectations | $70.00 |
NIKE stock forecast details
Nike stock closed at $77.10 on December 19, 2024. Nike shares rose to $86.24 immediately after the report, as investors breathed a sigh of relief that the results weren’t too bad.
Nike kept its forward guidance for the conference call, announcing that third-quarter 2025 revenue is expected to decline by double digits, well below consensus estimates of a 2.4% year-over-year decline. Gross margins are expected to decline by 300 to 350 basis points, including restructuring costs, during the same period last year. This caused Nike stock to collapse and give up its after-market gains, falling to a low of $71.00 in the after-market.
CEO Elliott Hill’s priorities
Nike will reinvest in its brands to create inspiring stories. They also plan to be aggressive in sports marketing as they have re-signed with the NFL, NBA, WNBA, FC Barcelona and the Brazilian Football Confederation in the last 60 days. Hill will prioritize rebuilding, earning the trust of its key wholesale partners and even naming first-name contacts at retailers. He plans to liquidate old inventory to return to premium pricing and transition Nike Digital to a full-price model. Most importantly, Hill wants Nike to refocus squarely on sports.
Hill acknowledged that there will be near-term pain necessary for long-term gain:
“I realize that some of these actions will have a negative impact on our results in the near term. But we are taking a long-term view here. We are making decisions that are best for the health of our brand and our business, decisions that will increase shareholder value. I firmly believe that Nike’s path to sustainable growth The profit will be through sports.
Summary: A powerful AI landscape
Today’s summary
(As of 12/23/2024 at 05:45 PM ET)
- 52 week range
- $457.52
▼
$629.38
- P/E ratio
- 33.92
- Price target
- $649.00
Electronic Design Automation (EDA) software and semiconductor IP developer Summary company NASDAQ:SNBS Struggling to hold triple bottom support at around $492.00 since announcing Q4 2024 earnings. Like most chip companies in the computer and technology sector, Synopsis sees the current semiconductor backdrop as a tale of two markets: the market for building strong artificial intelligence (AI). The traditional commercial market serves mobile, PC, laptop, industrial and automotive customers. .
Synopsis benefits from its AI-focused customers, but suffers from headwinds from the rest of the semiconductor industry. Abstract Software and intellectual property (IP) products are tools used by semiconductor companies to design and develop new chips. If these companies reduce their spending on research and development (R&D) due to market downturn or other factors, Synopsys may experience a decrease in demand for its products and services, impacting its revenue and growth.
Headwinds in China urge soft guidance; Crushes stocks
Synopsys stock forecast today
$649.00
31.76% upModerate purchase
Based on 10 analyst ratings
| High expectations | $690.00 |
|---|---|
| Average expectations | $649.00 |
| Low expectations | $570.00 |
Synopsys stock forecast details
The summary reported strong Q4 2025 EPS of $3.40, beating consensus estimates by 10 cents, as revenue rose 2.3% year-over-year to $1.64 billion, beating consensus estimates by $5.85 million. However, the incoming Trump administration’s pledge to lift tariffs and tighten trade restrictions with China could pose challenges for Synopsys, given the semiconductor industry’s reliance on global supply chains and its important ties to the Chinese market.
This uncertainty prompted Synopsis to provide weak forward guidance. For Q1 2025, the company issued downside EPS guidance of $2.77 to $2.82 versus a $3.52 consensus estimate, with revenue of $1.435 to $1.465 billion versus $1.64 billion. For the full year of fiscal 2025, EPS is expected to be between $14.88 and $14.96 versus $14.89, with revenue expected to be between $6.745 billion and $6.805 billion, below consensus estimates of $6.9 billion.
Brief is awaiting regulatory approvals, but hopes to close the $35 billion acquisition of the engineering simulation software designer ANSYS Company Nasdaq: Anas During the first half of 2025.
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