TLDR
- Nike shares dropped more than 2% in premarket trading Friday after Bank of America downgraded the stock to Underperform from Neutral.
- BofA cut its price target to $30 from $47, implying about 17% downside from Nike’s last close.
- Analysts lowered fiscal 2027 and 2028 EPS estimates by 11% and 12%, now expecting negative sales growth through fiscal 2027.
- North America wholesale strength is expected to fade as sell-through lags sell-in on weaker classic styles.
- Greater China sales fell 17% last quarter, with more pressure expected as Nike scales back online partner distribution.
Nike shares fell more than 2% in premarket trading on Friday. The drop came after Bank of America downgraded the stock to Underperform from Neutral.
Analyst Lorraine Hutchinson also slashed the price target to $30 from $47. That new target sits about 17% below Nike’s last closing price.
The bank now expects Nike’s sales recovery to slip into fiscal 2028. Previously, BofA had penciled in a turnaround starting sooner.
BofA cut its fiscal 2027 EPS estimate by 11% and its fiscal 2028 estimate by 12%. The fiscal 2027 figure now sits 14% below Visible Alpha consensus.
Wholesale Strength Starting to Crack
North America wholesale had been a bright spot for Nike, growing 14% in fiscal 2026 while total sales stayed flat. BofA thinks that trend is running out of road.
Sell-through is now lagging sell-in, meaning stores are struggling to move product as fast as Nike ships it. Classic styles are seeing declines, and some new launches aren’t landing with shoppers either.
That combination could make retailers more cautious about ordering. BofA expects North America wholesale sales to start declining in the second quarter and continue through the rest of fiscal 2027.
China Remains a Soft Spot
Nike’s Greater China sales fell 17% in the most recent quarter. BofA’s Luxury Goods team took a field trip to China and came back with a mixed picture.
They found weak sports demand and product newness that isn’t resonating with local consumers. Running momentum is also moderating, and excess inventory is piling up as demand softens.
Nike is also cutting back its online partner distribution in China. BofA expects that move to create extra promotional pressure through the second quarter before Nike can present its brand more cohesively online.
The stock has had a rough year regardless of today’s move. Nike shares are down 44% year to date, compared with a 12% gain for the S&P 500.
BofA said that decline already reflects a 40% cut to fiscal 2027 EPS estimates over the same stretch. Analysts don’t think the stock can hold a premium valuation if earnings keep getting trimmed.
There’s a silver lining on costs, at least. Tariff rates on Nike products now sit at 10% to 12.5%, down from around 20% a year ago.
BofA expects Nike’s new CFO to lean into cost cutting as a priority. Operating overhead reductions are seen as a likely area of focus.
Dividend coverage is another concern flagged in the note. BofA’s fiscal 2027 forecast implies a payout ratio of 107%, meaning the dividend would exceed earnings.
That’s part of why BofA also lowered its income rating on the stock. With sales pressured, the bank said Nike’s earnings outlook now depends heavily on gross margin expansion and tighter cost control.
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