Immediately 3 analysts downgraded Nike after a weak outlook. Shares plummeted by 15%

Weak sales forecast of Nike, presented on March 31 at the publication of the report for the last quarter, turned out to be worse than market expectations and became a reason for revision of the company's estimates by the largest Wall Street banks. Their analysts pointed to the protracted nature of business recovery and risks for sales growth in the near future. As a result, three investment banks refused to recommend buying Nike shares, reports CNBC. Shares of the company at the end of trading on April 1 collapsed by more than 15% - to the minimum since 2014.

Three major banks - Bank of America, Goldman Sachs and JPMorgan - worsened the rating of shares of sports retailer Nike, refusing to recommend buying its shares and taking a neutral position. Quotes of the company after that collapsed by 15.5%, reaching a low since the fall of 2014.

Analysts at Bank of America admitted they expected more from Nike's improved product innovation and the new Win Now strategy the company launched to get out of a long-term recession. BofA expected that the measures taken would lead to a return to sales growth as early as the first quarter of 2027. Instead, Nike management announced when releasing its financial report that the sales decline would persist through the third quarter of 2027. According to the bank's analysts, the return to growth is delayed by about nine months, leaving little room for multiples to expand. BofA lowered its target price on Nike shares to $55 from $73. After the April 1 collapse, the new target implies a 23% upside relative to the last close.

Goldman Sachs worsened the target price from $76 to $52, which almost corresponds to the price of Nike securities at the close of trading on March 31 and 16% higher than the current quotations. The bank cited weak demand for Nike products, ongoing inventory optimization and market pressures in Europe, the Middle East, Africa and China amid macroeconomic risks. "Dynamics in the sportswear segment remain weak, and the company will need more time to implement its strategy," CNBC quoted Goldman Sachs analyst Brooke Roach as saying.

JPMorgan said that despite early signs of improvement in North America and the running category, Nike's international business remains under pressure, delaying a recovery in financial performance. "This results in a longer timeframe to achieve a turnaround in revenue growth and return to double-digit operating margins," JPMorgan analyst Matthew Boss wrote.

Nike's forecast, which prompted a sharp revision by analysts, calls for a 2-4% decline in sales in its fiscal fourth quarter, which ends Ma. 31. Analysts had expected sales to grow 2% in the third quarter and thought growth would continue in the following quarters. The company also expects a 20% drop in revenue in China.

Nike is trying to recover, and to do so, it unveiled a new strategy at the end of 20254 that involves boosting sales through innovation, strengthening its position in key categories - such as running and basketball - and expanding cooperation with wholesale partners. After the pandemic, the company missed the trend of the growing popularity of running, losing competition in the athletic footwear segment to rivals such as Asics and New Balance. Another reason for the decline was the pivot from sportswear to lifestyle products and a more mainstream consumer.

In trading on April 1, Nike's securities fell 15.5% to their lowest level since September 2014, and the retailer's capitalization has fallen about 28% since the beginning of the year.

Despite Nike's continued difficulties, Wall Street is optimistic about the future of its stock, with 21 analysts out of 33 recommending it as a buy, according to MarketWatch. Ten analysts take a neutral stance and two advise shorting the company. The average target price is $73.9, which translates to an upside expectation of 65% to current quotes.

This article was AI-translated and verified by a human editor