Nike Price Target Cut
Bank of America Downgrades Nike and Cuts Price Target to $30
Anonymous
Key Points
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Bank of America’s fiscal 2027 EPS forecast for Nike is 14% below Visible Alpha consensus.
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Bank of America based its $30 price target on a 16-times price-to-earnings multiple, down from 22 times and now in line with the peer average.
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Bank of America expects Nike’s North American wholesale sales to decline from the second quarter through the rest of fiscal 2027, as retail sell-through lags shipments to stores.
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Bank of America warned that Nike’s reduced partner online sales in China could fuel promotional pressure through the second quarter, while retailers may grow more cautious about taking on new launches.
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Nike’s tariff burden may ease: Bank of America estimated the company’s tariff rate at 10% to 12.5%, down from about 20% a year earlier.
Bank of America has turned sharply bearish on Nike, downgrading the sportswear giant to Underperform from Neutral and slashing its price target to $30 from $47 BofA Source. The bank projects Nike's sales will keep declining through fiscal 2027, citing weak demand in China and sluggish consumer interest in the company's core shoe lineup.
The downgrade intensifies pressure ahead of Nike's October 1 earnings report. Bank of America cut its earnings forecasts for fiscal 2027 and 2028 by 11% and 12%, warning that Nike's dividend payout ratio now exceeds 100%, putting the payout at risk Trading View.
Why Bank of America Turned Bearish
Bank of America's $30 target assumes a 16-times price-to-earnings multiple, down sharply from 22 times. This new multiple now matches Nike's peer average BofA Source. The bank's fiscal 2027 earnings-per-share forecast sits 14% below what Wall Street consensus expects, signaling deep skepticism about the company's recovery.
The core problem: Nike's classic products are selling poorly, and the company's turnaround is taking far longer than investors hoped BofA Source. Retail sell-through lags shipments to stores, meaning inventories pile up while demand stays soft.
China Weakness Threatens Margins and Discounts
China represents a major headwind. Nike's partner online sales in that market have shrunk, which could force the company into heavy discounting through the second quarter BofA Source. Retailers are also growing more cautious about stocking new product launches, further dampening wholesale demand.
North American wholesale sales are expected to decline from Q2 onward through all of fiscal 2027 BofA Source. This signals persistent weakness in Nike's biggest and most profitable region, with no clear recovery in sight.
One Bright Spot: Tariff Relief Ahead
Bank of America sees one potential tailwind: tariffs. The firm estimates Nike's tariff rate has fallen to 10% to 12.5%, down from about 20% a year ago BofA Source. This easing could provide modest margin relief if it continues, though it won't offset the sales weakness.
Other Analysts Split on Nike's Outlook
Not all Wall Street analysts agree with Bank of America's grim view. Oppenheimer maintained a positive rating and noted some improvement in its shoe-market tracker, suggesting demand may be stabilizing Trading View. Barclays also held its positive stance but cautioned that any return to sales growth won't be smooth or quick.
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