Nike (NKE) is facing a tougher road ahead as major Wall Street banks pull back their enthusiasm. On Wednesday, Nike stock fell sharply after an influx of analyst downgrades followed the footwear giant’s latest financial outlook. The stock dropped over 14% in early trading, hitting levels not seen in over a decade as experts warned that a full recovery will take longer than many had hoped.
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J.P. Morgan Downgrades Nike
Analyst Matthew Boss from J.P. Morgan (JPM) moved his rating on Nike to Neutral today, significantly lowering his expectations for the company’s future value. In his report, Boss slashed his price target for the stock to $52, down from a previous target of $86.
Boss noted that the timeline for Nike to get its profit margins back to historic levels has now shifted. In his official report, he stated, “Our timeline for NKE to return to a 10% operating margin now extends to FY29.” This suggests that while a turnaround is happening, the green shoots of recovery are being offset by a deteriorating outlook for earnings over the next year.
Citi Lowers the Bar
Joining the cautious stance, Paul Lejuez from Citi (C) also issued a Hold rating for Nike today. The bank lowered its price target for the stock to $53, down from its earlier forecast of $65. This change comes as analysts express less confidence in how quickly sales will start growing again.
Lejuez highlighted that the company is facing stiff competition and internal challenges. In his report, he wrote, “We no longer believe F26 will inflect the way we hoped, either on the sales or EBIT margin line.” He further added that the firm “no longer [has] the patience or conviction to wait another year” for a sales bounce that seems to be moving further away.
New Products Face a Hard Climb
A major part of the concern for both banks is that Nike’s classic franchises are slowing down, and new products are not yet ready to fill the gap. Management has admitted that they need to earn back space on store shelves from newer, fast-moving rivals.
According to the reports, the shift toward a pull model, where customers seek out the product rather than Nike having to push it through discounts, is taking more time than expected. Until inventory levels in stores are healthy and new designs take off, analysts believe the stock will continue to face pressure.
Is NKE Stock a Buy?
Nike’s stock has a consensus Moderate Buy rating among 23 Wall Street analysts. That rating is based on 14 Buy and nine Hold recommendations issued in the last three months. The average NKE price target of $63.60 implies nearly 40.2% upside from current levels.
