Nike sales warning leads Morgan Stanley, JPMorgan and others to suspend buy calls on the stock

(Bloomberg) — Nike Inc.’s warning of a slower year ahead led several analysts to withdraw their buy calls on the stock, sending Wall Street’s outlook to its lowest level in more than six years.

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

Nike’s fundamentals are “much worse than we thought,” UBS analyst Jay Sole wrote in a note Friday, lowering his rating on the stock to “buy” from “neutral.” “Its lifestyle business needs a major reset.”

Nike was once a favorite of 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 gained market share by attracting consumers with innovative new styles. Last week, Williams Trading’s Sam Poser issued an early warning, advising investors to “sell the stock” as a turnaround is unlikely before 2026, if at all.

Wall Street increased its downgrades on Friday, with Morgan Stanley’s Alex Straton bringing Nike down to equal weight. A string of disappointing results and a reduced outlook pushed its previous overweight thesis – which was based on revenue growth and improving profit and loss in the second half of fiscal 2025 – “out of sight”.

Shares fell 19%, trading as high as $76.13 in New York on Friday, the stock’s biggest intraday decline in more than 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.

As the prospects for a change in growth become more and more distant, investors are invited to “both subscribe to the success of styles which have not yet proven themselves and to look beyond a uncertain consumer discretionary environment,” wrote Stifel’s Jim Duffy in his downgrade note lowering Nike from “buy” to “hold.”

Still, many are sticking to their buy calls. Bank of America Corp. analyst Lorraine Hutchinson, who upgraded her stock to buy in April, said the forecast revision was larger than expected, but she sees the new estimates as achievable and “could prove conservative if innovation accelerates rapidly to offset lifestyle challenges.”

The story continues

For now, the combination of increasingly difficult macroeconomic conditions, an unfavorable channel mix and volatility in China is weighing on the minds of many analysts, including Raymond James’ Rick Patel. He cut his rating from market perform to outperform, writing that he has no confidence in the prospect of revenue growth.

–With assistance from Katrina Compoli and Michael Msika.

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