Shares of Nike Inc (NYSE:NKE, XETRA:NKE) tumbled more than 15% on Wednesday after a weaker-than-expected earnings outlook analysts across Wall Street warning that a turnaround may take longer than anticipated.
Bank of America cut its rating on Nike to “Neutral” from “Buy,” saying the company’s recovery timeline has been pushed out as management now expects sales to remain negative through the third quarter of fiscal 2027. The brokerage also reduced its price target to $55 from $73 and lowered its earnings estimates for fiscal 2027 and 2028.
“We see little room for multiple expansion,” the bank wrote, pointing to a delayed sales inflection and a longer path back to normalized earnings.
The downgrade comes despite pockets of strength, particularly in North America, where sales rose 3% in the latest quarter, driven by strong demand in running, football and basketball. However, analysts said this was offset by continued weak performance in sportswear and uneven sell-through.
Bank of America highlighted mounting challenges abroad, especially in China, where Nike is undertaking what it described as a “deliberate reset.” The company is reducing wholesale shipments and cleaning up its digital channels, a process expected to drive a roughly 20% year-over-year sales decline in the fourth quarter and continued weakness into fiscal 2027.
Margins also remain under pressure. While gross margin declines were not as severe as expected in the third quarter, tariffs continue to weigh on profitability, with meaningful improvement not anticipated until the second quarter of fiscal 2027. Rising oil prices could further increase input costs, adding another layer of risk.
Analysts at UBS struck a similarly cautious tone, saying they do not see a compelling reason to buy the stock following its sharp decline.
“We don’t believe the pullback represents a good entry point,” UBS wrote, noting that Nike’s valuation still implies a meaningful rebound that has yet to materialize. The bank warned that earnings expectations are likely to be revised lower, and that a recovery could take longer than investors anticipate.
UBS also cut its earnings forecasts across fiscal 2026 through 2028, citing weaker sales trends in Europe, the Middle East and Africa, as well as Greater China, along with persistent promotional pressures and limited scope for cost leverage.
At Jefferies, analysts described Nike as a “work in progress,” arguing that while early signs of a turnaround are visible, patience will be required.
Jefferies pointed to strong growth in the running category—up more than 20%—as evidence that Nike’s renewed focus on performance-driven products is gaining traction. Still, the firm said broader challenges remain, including declining direct-to-consumer sales, elevated inventory in some regions and continued weakness in sportswear.
“Valuation near trough levels limits downside, but the payoff likely requires patience,” Jefferies said, adding that meaningful improvement may not come until fiscal 2028.