Nike’s Sales Warning Leads Morgan Stanley, JPMorgan and More to Pause Buy Calls on Stock

(Bloomberg) — Nike Inc.’s warning of a slower year ahead led several analysts to strip the stock of their buy calls putting Wall Street’s outlook at a more than six-year low.

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The sneaker maker has been losing ground to competition from rivals like Adidas AG and its disappointing outlook led at least seven brokers, including JPMorgan Chase & Co, Morgan Stanley and UBS Group AG, to drop their once bullish positions and move to the sidelines. Nike’s consensus rating — a proxy for the ratio of buy, hold and sell recommendations — fell to 3.8 out of five on Friday, the lowest level since 2017.

Fundamental trends at Nike are “much worse than we realized,” UBS analyst Jay Sole wrote in a note Friday as he downgraded his recommendation on the stock to neutral from buy. “Its lifestyle business needs a major reset.”

Nike was once a favorite among Wall Street analysts, but in recent months the world’s largest sportswear company has lost fans as competitors like On Holding AG, Deckers Outdoor Corp.’s Hoka and Adidas have taken market share by appealing to consumers with innovative new styles. Last week, Williams Trading’s Sam Poser put out an early warning, telling investors to “sell the stock,” with a turnaround unlikely before 2026, if at all.

Wall Street piled on the downgrades Friday with Morgan Stanley’s Alex Straton cutting Nike to equal-weight. A disappointing set of earnings and reduced outlook pushed her prior overweight thesis — reliant on revenue growth and profit-and-loss improvement in the second half of fiscal 2025 — “out of view.”

Shares fell 19%, trading as low as $76.13 in New York on Friday, the stock’s biggest intraday decline in over 23 years. Nike now has 21 buy-equivalent recommendations, 20 holds and three sells among analysts tracked by Bloomberg. The average price target is $95.

With prospects for growth inflection pushed further out, investors are being asked to “both underwrite success of not yet proven styles and look across an uncertain consumer discretionary backdrop,” Stifel’s Jim Duffy wrote in his downgrade note cutting Nike to hold from buy.

Still, many are sticking to their buy calls. Bank of America Corp. analyst Lorraine Hutchinson, who upgraded her recommendation on the stock to buy in April, said the guidance reset was bigger than expected but she sees the new estimates as achievable and they “could prove conservative if the innovation ramps quickly to offset the lifestyle challenges.”

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For now, a combination of increasingly difficult macroeconomic conditions, unfavorable channel mix, and volatility in China is weighing on the minds of many analysts, including Raymond James’ Rick Patel. He cut his rating to market perform from outperform, writing he did not have confidence in there being upside to revenue.

–With assistance from Katrina Compoli and Michael Msika.

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