Key Takeaways:
RBC Capital Markets downgraded Nike to sector perform from outperform, cutting its price target to $50 from $70.
"Nike's turnaround under Elliott Hill is making progress, but slower and narrower than we were anticipating," Piral Dadhania, analyst at RBC Capital Markets, said.
The new $50 target implies about 12% upside from Tuesday's close. Shares of Nike have fallen more than 30% year to date, compared with the S&P 500's 6.5% gain. The stock is down roughly 50% since Hill returned as chief executive officer in October 2024 and more than 70% from its late 2021 highs.
The downgrade adds pressure on Hill's "Win Now" strategy, which includes rebuilding wholesale relationships and refreshing product lines. Nike reports fiscal third-quarter results on June 30, with China revenue expected to decline about 20%.
Dadhania cited limited breadth across product improvements and the risk of losing market share in running footwear to On Running, Hoka and New Balance, as well as in women's apparel to Vuori, Alo Yoga and Lululemon. The analyst also flagged that Dick's Sporting Goods' acquisition of Foot Locker could lead to tighter buying discipline, with potential cuts of underperforming styles by 30%.
The downgrade follows insider buying from both Hill and Apple Inc. Chief Executive Officer Tim Cook, a Nike board member — moves that typically signal confidence but have failed to stem the stock's decline. The Club's position in Nike, initiated last September at roughly $69 per share, carries unrealized losses of about 36%.
The downgrade signals that even the 2026 FIFA World Cup may not be enough to lift Nike's revenue this year. Investors will watch the June 30 earnings report for signs that Hill's product and inventory cleanup is gaining traction.
This article is for informational purposes only and does not constitute investment advice.
