Nike Inc (NYSE:NKE, ETR:NKE) shares are down more than 6% this week following an investor meeting with CEO Elliott Hill and CFO Matt Friend.
Analysts believe the challenges facing Nike will persist for several years.
“We see a multiyear turnaround and with valuations not cheap, ‘Just Don’t Buy It,’” analysts at Jefferies wrote in a note to clients.
While they are impressed by new CEO Hill, they believe prior leadership has left Nike in a “bad spot” with the wrong distribution and wrong product.
“Having spent 30 plus years with Nike, Hill drew parallels of the current issues to 2017, when Nike simply was able to reset its product. However, he also referenced that the current challenges were more complex, which would require time to address,” analysts wrote.
What is different for Nike this time are its inventory challenges, analysts believe.
“Management cited the need for inventory (aged product) to come out of the marketplace, which will result in a more promotional environment near term. Most of this clearance will involve higher-margin Lifestyle franchises like Air Jordan 1, Air Force 1, and Nike Dunk,” they wrote.
Jefferies also believe Nike needs to rebuild its wholesale partnerships.
“Early in his tenure, Hill has met with retail partners and started implementing an integrated consumer-led marketplace to foster stronger collaboration between NKE's Direct and Wholesale businesses, “they wrote. “That said, we anticipate retail partners will continue featuring competitors like On, HOKA, Adidas, and New Balance, as these brands are resonating with consumers.”
The analysts have a ‘Hold’ rating on the stock and $75 price target.
Citi analysts, meanwhile, downgraded their rating on Nike to ‘Neutral’ from ‘Buy’ and awarded it a $72 price target.
“After discussing the key building blocks and challenges to achieve a turnaround, we no longer believe fiscal 2026 will inflect the way we hoped, either on the sales or EBIT margin line,” they wrote. “Topline pressures seem likely to continue as they manage down key franchises further in fiscal 2026, without enough new product at scale to fill the void.”
Citi’s analyst added that they believe fiscal 2026 consensus estimates are too high, making the turnaround time much less visible. “We no longer have the patience or conviction to wait another year,” they wrote.
Shares of Nike are down 6.7% in the last five days, trading hands at about $70.