Bank of America has downgraded Nike’s stock to underperform, citing escalating risks in the company’s turnaround strategy and recommending that investors sell their shares. The investment bank lowered its price target on shares to $30 from $47, indicating a potential downside of nearly 17% from recent closing prices.
Analyst Lorraine Hutchinson warned in a client note that risks to Nike’s earnings estimates and stock price are increasing, as the company’s innovation efforts are being overshadowed by a struggling classics business amid category-wide sluggishness. “We now expect negative sales growth through fiscal 2027, contrary to our previous outlook for a spring inflection,” Hutchinson stated.
The analyst highlighted several concerns, including a dividend payout ratio exceeding 100%, leading to a reduction in income rating. The new price target is based on a price-to-earnings multiple of 16x, aligned with peer averages. Nike shares have already declined 47% over the past year, facing macroeconomic challenges like tariff hikes that complicate the “Win Now” recovery strategy.
Bank of America also points to difficulties in China, a critical market, where a tougher demand backdrop and reduced partner online sales are expected to cause promotional pressure. Competition is intensifying, with risks of sales declines persisting through fiscal 2027. Hutchinson cut her estimates for Nike’s fiscal 2027 and 2028 earnings per share by 11% and 12%, respectively.
Wall Street sentiment has turned bearish, with five analysts downgrading the stock since early August. According to LSEG data, 26 out of 44 analysts covering Nike now hold a hold rating, reflecting broader skepticism about the company’s near-term prospects.
