Consumer Spec - Pre Market Wrap
NKE Double Cut to $46, TGT Wolfe Top Pick $162 | HD FIVE ROST DRI Downgrades | World Cup Read-Through, Off-Price BofA, DPZ CEO Out, EPC Bid Rejected
Futures opening lower but weakness concentrated so far on semis/AI weakness while EU consumer sectors trade well and XRT so far small down in the pre-market. If one follows the classic algo playbook, would think some type of rotation can happen today out of tech/semis into beaten down areas like retail, homebuilders or financials.
Consumer pre-market is all about bifurcation again — NKE takes a double hit with Evercore to In Line and Goldman cutting PT, both converging at $46 as the turnaround at scale takes longer than bulls had hoped. Wolfe runs the playbook on the other side: upgrades TGT to Outperform and Top Pick at $162, while cutting HD and FIVE — housing locked-in and the Dumpling trade clearly waning. Off-price still works per BofA on BURL, ROST, TJX despite Wells trimming ROST on low-end demo. DPZ loses CEO Weiner — disappointing but Jordan the obvious heir. World Cup read-through positive across alc-bev, lodging, retail per GS. DRI to In Line at Evercore.
MACRO & MARKETS
MACRO: GOLDMAN SEES CORE PCE COOLING TO 2.2% BY 2027 AS AI AND ENERGY EFFECTS FADE
Goldman expects core PCE inflation to remain elevated through end-2026 before cooling sharply in 2027 as AI-related price pressures and energy passthrough effects dissipate. The firm forecasts core PCE at 3.2% YoY in December 2026, slowing to 2.2% by December 2027; core CPI is projected at 2.6% by December 2026 and 2.2% by December 2027. Goldman flags AI-related pressure on memory prices as an underappreciated driver of inflation via measurement distortions that amplify impact on core PCE, with monthly software and accessories inflation expected to slow from 4-5% recently to about 0.6% by Q4 2026.
Following the US-Iran agreement, Goldman lowered oil forecasts to 80/bbl in Q4 2026 and 75 in 2027, implying about 20bps and 5bps less upward pressure on headline and core PCE this year than previously assumed. Risks remain skewed to the upside on net, particularly on further Middle East deterioration. Read-through for consumer: easing input cost pressures (oil, memory/electronics) and a slower disinflation path through 2026 before relief in 2027.
US MACRO (EVERCORE ISI): TWO-PHASE WARSH FED ROLLOUT MAPPED; HIKES NEAR-TERM, CUTS IN 2027
The firm lays out a two-phase framework for the Warsh Fed: Phase one runs through end-2026 and is focused on confronting the current challenge to price stability and establishing inflation credibility up front, raising the likelihood of near-term rate hikes in July/September; Phase two from end-2026 onward shifts to institutional reform alongside potentially building the intellectual case for steering rates in a more dovish direction on structural developments, particularly AI, strengthening the case for cuts in 2027. The analyst sees rates potentially +50bp this year (described as “on a knife-edge”) followed by -75-100bp next year, with the yield curve flattening in 2026 and re-steepening in 2027. On equities, the firm expects market breadth to narrow toward secular themes during the hiking phase and widen out more meaningfully in 2027 as cuts materialize.
CONSUMER STREET RESEARCH
Upgrades
Hilton Worldwide (HLT) Raised to Hold at CFRA; PT $358
Target (TGT) Raised to Outperform at Wolfe; PT $162
Downgrades
Darden (DRI) Cut to Inline at Evercore ISI; PT $230
Five Below (FIVE) Cut to Peerperform at Wolfe
Home Depot (HD) Cut to Peerperform at Wolfe
Nike (NKE) Cut to Inline at Evercore ISI; PT $46
Ross Stores (ROST) Cut to Equal-Weight at Wells Fargo; PT $245
Initiations
Campbell’s (CPB) Rated New Market Perform at William Blair
EARNINGS REPORTS
CCL will report around 9am which will be covered in the Afternoon note
ANALYST RESEARCH & NEWS
NKE: NIKE DOWNGRADED TO IN LINE AT EVERCORE; GOLDMAN CUTS TARGET; BOTH PTS CONVERGE AT 46
Nike hit by two negative actions today with both broker price targets converging at 46. Evercore downgraded from Outperform to In Line with PT cut to 46 from 57, the firm citing turnarounds at scale taking time, unexpected new wholesale channel resets lower, minimal needle-moving innovation in the pipeline into CY27, and near-term execution issues including World Cup delivery problems; the analyst sees rising probability Nike will have to signal consensus lower again in the near term to avoid a worse scenario where it would have to lower the full FY27 outlook at the Fall 2026 analyst day. Goldman lowered its PT to 46 from 52 while keeping Neutral, with Q4 data points showing mixed momentum: encouraging North America pricing and promotional signals offset by muted purchase intent, uneven store traffic, and weak China sell-through and brand momentum. Bull-case items Evercore flags include performance categories still solid, potential 1B tariff refund bolstering reinvestment pace, and F4Q consensus EPS appearing safe at 0.12.
TGT: WOLFE UPGRADES TO OUTPERFORM, NAMES TOP PICK INTO YEAR-END WITH 162 PT
Wolfe upgraded Target from Peerperform to Outperform with a 162 PT and named it Top Pick into year-end. The firm flags a rhythm not seen in years as store resets, improved execution, and the new leadership team shake up the status quo, with summer store resets accelerating and the firm impressed by what they have seen so far. The analyst sees a roughly 3:1 skew with upside to 160 and downside to 120, calling mid-9 EPS achievable in 2027 at a 17x multiple, putting a 160+ target price in reach. Wolfe describes Target as becoming a destination once again in what remains a heavily debated name.
HD: WOLFE DOWNGRADES TO PEERPERFORM, FLAGS SHOW-ME STORY WITH HOUSING LOCKED IN
Wolfe downgraded Home Depot from Outperform to Peerperform, with no PT under firm policy though the analyst flags HD should trade in the low-to-mid 20s P/E. The firm views HD as a show-me story as the Large Pro acquisitions are yet to pay off and the housing market remains set to be locked in for years, with any affordability-driven EHS improvement likely a 2027-and-beyond story. The note highlights HD’s de-rating to 21.2x NTM P/E versus LOW at 16.7x, TSCO at 13.6x, and FND at 24.7x; HD sits 0.2 standard deviations below its 5-year average, in the 42nd percentile, with the premium to the S&P now 50bps versus a 5-year average of 10%.
FIVE: WOLFE DOWNGRADES TO PEERPERFORM AS DUMPLING TREND WANES, 1H27 COMPS TOO HIGH
Wolfe downgraded Five Below from Outperform to Peerperform. The firm flags that FIVE posted the best 1Q SSS in their coverage, but with the top line slowing and early signs of the Dumpling trend waning, the firm is getting more cautious; comp estimates for 1H27 are seen as too high and the story has shifted from better retail execution to trend timing. FIVE was a Top Pick in the September Sector Initiation and the second-best performer (+32% vs S&P +13%), but the firm now sees the initial boost from improved merchandising and pricing as realized, with a tougher 2027 setup and concerns about decremental margins as new fads drive excess traffic.
ROST: WELLS FARGO DOWNGRADES TO EQUAL WEIGHT, 245 PT ON LOW-END DEMO AND INVENTORY RISKS
Wells cuts ROST to EW after the stock's +90% run, citing low-end consumer deterioration (ASO flagged it two weeks ago), rate-of-change deceleration as ROST laps a +17% 1Q26 comp, and elevated inventory risk atypical for the off-price model. Per-store inventory ended 3Q25 at +15% y/y (vs. +5% in 2Q25), the firm models +18% to end 1Q26, and the analyst flags that ROST pulled the per-store inventory KPI entirely in 4Q25 and 1Q26, raising questions on how aggressively the model is currently being run. 2026 EPS nudges to $7.84 from $7.80 (inline with Street's $7.83), while 2027 is cut to $8.45 from $8.75, now 2.1% below Street's $8.63 and the firm's first material below-consensus print on the name; the 2027 model explicitly bakes in a negative 1Q comp and margin pressure from inventory. PT held at $245 on 28-29x 2027E, with the firm noting ROST has re-rated from ~22x to ~30x under CEO Conroy and now trades in-line with TJX, leaving the multiple catalyst that anchored the original OW upgrade fully played out.
Two notes on DPZ CEO transition
DPZ: BENCHMARK REITERATES BUY, 430 PT AS CEO WEINER ANNOUNCES RETIREMENT, COO JORDAN ELEVATED
Benchmark reiterated Buy on Domino’s with a 430 PT after CEO Russell Weiner (age 57) announced his intention to retire from the CEO position at end-September, transitioning to Executive Chairman Designate and then Executive Chairman in early 2027. Current President and COO Joe Jordan, a 15-year DPZ veteran across marketing, US and international operations, technology, and franchise support, will be elevated to CEO. The firm expects the market may react negatively to Weiner’s departure but stresses leadership and strategic continuity under Jordan and continued execution of the “Hungry for More” growth plan, with market share gains fueling industry-leading franchisee profitability.
DPZ: BTIG CUTS PT TO $425 FROM $450 ON CEO TRANSITION, MAINTAINS BUY
Russell Weiner is retiring as CEO at the end of September after just over four years in the role and 18 years with the company, transitioning to Executive Chairman as David Brandon departs the board after 28 years (11 as CEO). COO and President of Domino’s U.S. Joe Jordan succeeds Weiner on October 1 and joins the Board, viewed as the obvious successor though the firm is disappointed by Weiner’s exit given his role in the U.S. turnaround, the Mix and Match launch, carryout differentiation, and post-financial-crisis advertising strategy. With SSS moderated below the 3% long-term target and a succession of disappointing news (1Q earnings, softer sales outlook, now this), shares are expected under near-term pressure as the firm looks for the next catalyst, while continuing to view Domino’s as the strongest pizza brand with best-in-class unit economics, franchise system, value platform, and advertising scale. PT lowered to $425 from $450; remain Buy.
DRI: EVERCORE DOWNGRADES TO IN LINE, 230 PT ON LIMITED EPS UPSIDE VS CONSENSUS
The firm downgrades DRI to In Line, holding the $230 PT (18.5x FY28e EPS of $12.37, midpoint of the 16-21x range), citing limited EPS upside vs. consensus and more balanced risk/reward despite no fundamental issues at the company. F4Q EPS is trimmed to $3.62 from $3.65 (cons $3.64) and consolidated SSS to 4.1% from 4.2%, with Olive Garden SSS cut to +2% from +2.5% (cons +3.4%, lapping a 3pp gap in F4Q25) and LongHorn raised to +8.5% from +7.4% (cons +6.6%); the analyst estimates a ~70bp drag on OG from smaller portions and questions whether LongHorn's +6pp industry gap narrows as tax refund tailwinds fade. FY27 EPS is cut to $11.41 from $11.44 (cons $11.39) on higher marketing spend to support OG, with consolidated SSS held at +2.5% (OG +2.5%, LH +3.8%, Fine Dining/Specialty +2%), food cost margin at 30.5% on ~3% inflation and MSD beef cost growth, and screwworm flagged as an incremental wildcard. The firm wants to see OG initiate traffic drivers via value marketing, protein-centric LTOs, and small-portion options, and notes Darden continues to assess 3PD at Olive Garden pending resolution on price transparency, data sharing, and tip sharing.
CPB: WILLIAM BLAIR INITIATES AT MARKET PERFORM ON BALANCED RISK/REWARD
William Blair initiated coverage of Campbell’s at Market Perform. The firm sees CPB as well positioned across food and beverage segments, with leadership brands typically holding top or significant share and a strategy for growth and productivity that should enable reliable top- and bottom-line growth and a healthy balance sheet with capital allocation optionality. The analyst flags challenges to revive certain brands, adapt to changing consumer preferences, and mitigate macro headwinds as reasonable factors giving investors pause, supporting the balanced view at initiation.
NCLH: TD COWEN RAISES PT TO 24, BUY MAINTAINED ON NEW LEADERSHIP AND MARGIN RUNWAY
TD Cowen raised the price target on Norwegian Cruise Line to 24 from 22 while keeping Buy. Looking past recent soft trends, the firm believes new NCLH leadership can drive improving results and stock outperformance over the next year given well-loved brands, a modern fleet, and the imminent launch of the revamped private island. The analyst also flags slowing capacity growth in 27E and identifies NCLH as having the biggest margin opportunity in the cruise group.
CELH: MORGAN STANLEY CUTS PT TO $48 FROM $55, MAINTAINS OW
The firm is lowering estimates on continued brand Celsius scanner weakness while reiterating OW on favorable risk/reward despite limited near-term visibility. 2Q sales estimate cut -3% to $857M vs $895M consensus (viewed as stale) and ~$865M buy-side, as brand Celsius runs -2% in Nielsen AMO QTD and -MSD in recent weeks on SKU rationalization and lack of innovation, while Alani is +60% QTD but slowing as it laps last year’s Cotton Candy LTO. FY26/FY27 sales estimates trimmed -2%/-3% and Adj EBITDA -2%/-5%, with the PT lowered to $48 from $55 on a reduced multiple. The analyst sees a path to improved scanner trends later this summer via shelf space gains at two major mass retailers and a value-oriented chain, alongside Red Bull’s +HSD price increase effective August 1 and easier FY27 comps backed by a stronger innovation slate.
EPC: RAYMOND JAMES ON REPORTED $30/SHARE YELLOW WOOD PARTNERS OFFER REJECTION
Per a Bloomberg report, the company received and rejected an unsolicited $30/share takeover bid from PE firm Yellow Wood Partners (whose portfolio includes ChapStick, Q-tips, Suave, Ponds, Noxzema, V05, and Dr. Scholl’s), a 32% premium and roughly in line with where shares traded in March/April 2025, which management deemed too low; neither side has commented. The firm sees rationale for smaller HPC players to pursue scale given consumer wallet pressure, cost inflation, and retailer consolidation, with the reported offer implying 14x P/E and 9x EBITDA on CY26 estimates, below recent consumer deal multiples though most recent HPC transactions have been tuck-ins of higher-growth brands versus EPC’s FY26 outlook of organic sales -1% to +2% and EPS -6% to +16%. Short interest of 11.1% (6.3 days to cover) further fuels likely outperformance, while CEO Rod Little’s support at the February 5, 2026 annual meeting narrowed to 85% from 99% in 2025.
FIGS: KEYBANC POST-NDR, REITERATES OW AND $19 PT
The firm hosted CFO Sarah Oughtred and SVP of IR Tom Shaw, with commentary consistent with the May call as search traffic, website visits, reactivation, and acquisition continue to trend favorably across the cohort base with no notable shifts in spending patterns, and earlier pricing actions have seen “less elasticity” than initially planned while purchase frequency held up. GM is guided to the mid-to-high 60% range with limited expansion as mix shifts toward non-scrubwear, TEAMS, and international, offset by selling efficiencies (including a potential MT 3PL), full-funnel marketing leverage, and G&A leverage. TEAMS is scaling at MSD with a path to DD and beginning international rollout (EBITDA-accretive despite structurally lower margins), International (~20% of sales) is pivoting to a “go deep” localization strategy across ~85 global markets vs 32 in FY24, and physical retail is emerging as an acquisition channel with ~40% of store customers new to the brand, ~24-month payback, and four additional openings planned this year (targeting 2,500-3,500 sq ft vs 2,000 sq ft today).
OFF-PRICE (BOFA): LIMITED RISK FROM INVENTORY BUILD, REITERATE BUY ON BURL, ROST, TJX
The firm sees limited risk from higher off-price in-store inventories, with TJX, ROST, and BURL striking the right balance between offense and defense; inventory per square foot ended 4Q +11% and helped fuel off-price comps +10% in 1Q, with 1Q ending in-store inventories up 15%. ROST’s 10% in-store inventory growth at 4Q-end preceded 17% 1Q comp growth, and the analyst expects several more quarters of ramping in-store inventory supported by more precise planning; BURL’s 1Q in-store inventories grew 11% on Mother’s Day and warm-weather prep with growth expected to normalize, though a 3Q jump is possible as Home was intentionally under-assorted last year to mitigate tariffs. TJX has grown inventory per store at a steady 3% CAGR from 1Q16 to 1Q26 versus a 7% sales CAGR, reflecting opportunistic buying on strong product availability and tariff/inflation-driven cost moves, with the good/better/best assortment sustaining the value proposition across income cohorts. Buy reiterated on BURL, ROST, and TJX as the value proposition continues to attract core and trade-down consumers.
US ORAL NICOTINE POUCHES (JEFFERIES): BTI POSITIONED AS CATEGORY LEADER, £1.3BN PROFIT OPPORTUNITY BY 2030E
The firm’s proprietary US Nicotine Pouch model points to category volumes growing a further 2.2x over the next five years, driven by total users rising to 25.2m by 2030E from 15.8m in 2025E and per capita consumption climbing from 3.8 to 5.3 pouches/day in line with current Western European levels. BAT (BTI) is viewed as the potential category leader, with US ONP volume share more than doubling to 16.2% in 2025 from 6.7% in 2024 and Velo momentum continuing into 1H26 on a best-in-class innovation pipeline; the analyst sees BAT reaching 17.5bn pouches by 2030E vs 3.5bn in 2025 and £1.3bn of US ONP Category Contribution by 2030E, well above Street, lifting Group F26/27/28E org EBIT growth estimates to +4.6%/+5.2%/+5.6% vs Street +4.3%/+5.1%/+4.1%. The Top 3 (PM, BAT, MO) hold 88% volume share, with BAT and MO narrowing the price/pouch gap to leader PM and expected to close it by 2030E, further underpinning the category’s premium credentials. For PM, the firm models US org EBIT -32.6% in F26 on lower revenue/pouch and elevated A&P from the ZYN Ultra launch, a partial recovery to +21.1% org EBIT growth in F27E, with US org EBIT reaching $1.1bn in F28E and expanding to $1.37bn by F30E.
FIFA WORLD CUP 2026 (GOLDMAN): EARLY READ POINTS TO IMPROVING TRENDS IN ALC-BEV, LODGING, AND RETAIL
The firm’s initial review of industry data since the tournament kicked off in the US on June 12 (concluding July 19) suggests the event is beginning to drive measurable improvement in consumer activity across multiple categories, prompting reiteration of Buy ratings spanning alc-bev, lodging, retail, gaming, and online travel. Specifically, the analyst reiterates Buy on STZ, BUD, HEINY, and CABGY (US and European Consumer Staples); ASO and DKS (US Hardlines Retail); ANF (US Specialty and Apparel Retail); H, MAR, HLT, and IHG (US and European Lodging & Leisure); FLUT, DKNG, LTMC, and ENT (US and European Sports Betting & Gaming); and ABNB, EXPE, and BKNG (US Internet).
CAR: BARCLAYS ON $650MN PENTWATER SHORT-SWING SETTLEMENT
The company announced a $650mn cash settlement (subject to court approval) for short-swing profits recovery from Pentwater, equating to ~10% of market cap with the firm flagging a possible strong positive market reaction. The settlement could be viewed as a capital raise without dilution, providing an opportunity to reduce debt toward the ~6x leverage target by year-end vs 7.6x at 1Q and implying a possible ~0.7x leverage reduction at the ‘26 guide midpoint.
BBY: KEYBANC ON CFO MATT BILUNAS DEPARTURE
After the close, the company announced that CFO Matt Bilunas will step down on July 31 after 20 years at the company and seven years as CFO, with an external search underway for a successor who will work with incoming CEO Jason Bonfig. The move follows the April 22 announcement of Bonfig succeeding Corie Barry at the end of F3Q; the firm views Bilunas as a strong leader through a challenging industry backdrop and remains positive on appliance competitiveness and the new store opportunity, while continuing to flag risks from softer June trends, tougher gaming comparisons, product inflation, and a difficult spending backdrop.
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EARNINGS CALENDAR
