Nike losing Wall Street trust: analyst ratings hit 25-year low

Nike remains one of the most recognizable sports brands in the world, but Wall Street has become increasingly cautious about the company. According to Bloomberg's calculations, analyst sentiment toward Nike shares is the weakest in at least 25 years. The reason is not about the brand disappearing, but rather investors' fading belief in a rapid return to sustainable growth.

In recent weeks, several banks have downgraded Nike or cut their price targets on the stock. BMO Capital initiated coverage with an Underperform rating and a $30 target, Morgan Stanley keeps a negative recommendation with a $31 target, JPMorgan previously lowered its rating to Underweight, and UBS reduced its target price from $48 to $42 in September.

Nike shares traded at around $36 in September — nearly half of what they were a year ago. Now the main question for investors is whether CEO Elliott Hill can quickly restore consumer interest in new products and stop the sales decline in problem areas.

Nike sells $46 billion a year, but growth is almost gone

At first glance, Nike remains a huge and stable business.

For fiscal year 2026, the company reported revenue of $46.4 billion versus $46.3 billion a year earlier. However, excluding currency effects, sales fell 2%.

In the fourth quarter, the situation looked even weaker: revenue was $11 billion, down 4% on a currency-neutral basis.

It's the lack of meaningful growth that worries Wall Street. Nike has historically been expected not just to post steady tens of billions of dollars in sales, but to grow revenue and profit faster than the market thanks to the power of its brand.

Now investors have to wait for proof that the model still works.

Direct-to-consumer and digital have become a weak spot

Pressure is especially evident in the business Nike has made a central part of its strategy for years.

NIKE Direct sales — through company-owned stores and digital channels — fell 6% to $17.7 billion for the fiscal year, or 8% excluding currency swings.

Nike Brand digital sales dropped 12% to $8.6 billion.

In the most recent quarter, NIKE Direct brought in $4.1 billion — down 9% on a currency-neutral basis from a year ago. Digital sales again fell 12%.

This is particularly disappointing for the company because just a few years ago Nike was actively reducing its dependence on external retail chains and trying to sell more product directly to consumers.

That strategy was supposed to boost margins and strengthen brand control. Instead, competitors gained more shelf space, while Nike's own digital sales began to weaken.

Nike has returned to retailers — but that doesn't necessarily mean customers are back

Hill's new strategy partially reverses the previous course. Nike is once again strengthening relationships with major retail chains and putting products back on their shelves.

In the fourth quarter, wholesale revenue rose to $6.6 billion — up 4% in reported currency and 1% excluding currency effects.

That was one of the few notable positive signals in the latest earnings.

But analysts point out an important distinction: higher shipments to stores do not necessarily translate into higher purchases by end consumers.

If retailers receive more sneakers and apparel than they can sell, inventories build up, discounts appear, and future orders may shrink again.

So for Wall Street, what matters is not only Nike's shipments to partners, but the velocity at which product actually moves off shelves.

China remains one of Nike's biggest problems

The situation in Greater China remains particularly difficult.

Nike's revenue in the region fell 13% on a currency-neutral basis in fiscal 2026.

Wholesale sales dropped 14%, and NIKE Direct declined 12%. Digital sales in China plunged 29%.

Weakness in the Chinese market is especially painful because for many years the region was a key driver of the company's international growth.

Nike is simultaneously battling a more cautious consumer and stronger domestic sports brands.

Without a return to growth in China, it will be considerably harder to restore the company's former global momentum.

While Nike restructures, competitors are taking its space

Another cause of investor concern is that the market isn't waiting for Nike to finish overhauling.

In running, On and Hoka have grown rapidly, gaining a foothold in the premium segment and attracting buyers who previously associated performance footwear primarily with Nike.

Competition is gradually spreading to other categories as well.

Swiss brand On recently announced a full entry into soccer, signed Kylian Mbappé, and appointed Thierry Henry as director of football.

The move of one athlete alone doesn't define the state of Nike's multibillion-dollar business. But it reflects a broader trend: young competitors are no longer confined to narrow sports niches and are increasingly encroaching on the territory of the largest brands.

Even a strong quarter of profit wasn't quite what it seemed

Nike's latest report contained a very impressive figure: quarterly net income jumped more than fivefold to $1.1 billion.

However, much of that result was not driven by a sharp improvement in sales.

Nike recorded an expected benefit of about $986 million from the refund of U.S. tariffs previously paid under the International Emergency Economic Powers Act.

That factor added about nine percentage points to the quarter's gross margin and roughly $0.52 to earnings per share.

As a result, investors are treating the earnings surge with caution and paying more attention to revenue trends, inventories, and real consumer demand.

Why analysts no longer rush to buy Nike on the dip

In the past, a decline in Nike's stock was often viewed as a chance to buy a strong global brand at a discount.

Now that attitude has changed.

BMO Capital initiated coverage in September with an Underperform rating and a $30 price target. Morgan Stanley values the shares at about $31. JPMorgan keeps an Underweight rating with a $40 target.

At the same time, some positive views remain, so there's no unanimous consensus on Wall Street. Some analysts believe the new management can refresh the product pipeline and get growth back.

But the overall balance of recommendations has deteriorated substantially.

According to Bloomberg's assessment, such cautious analyst sentiment toward Nike hasn't been seen in at least a quarter of a century.

Nike's biggest test comes on October 1

The next examination is coming very soon.

Nike will report results for the first quarter of fiscal 2027 on October 1 after U.S. market close.

Investors will be especially focused on sales in China, the state of the digital business, wholesale orders, inventories, and the level of discounting.

In its annual report, Nike disclosed inventories of about $7.5 billion — roughly unchanged from a year earlier. For the market, it's now critical to understand how quickly the company can turn those goods into actual sales without excessive markdowns.

Equally important will be management's guidance.

If Nike shows that new models are winning back customers, digital sales are stabilizing, and growth in wholesale shipments is matched by real demand, the current pessimism among analysts could start to ease.

But if declines in Direct and China continue, Wall Street will have yet another argument that the recovery of one of the world's strongest sports brands will take much longer than investors expected even a year ago.

Based on: Bloomberg, NIKE Investor Relations, NIKE / SEC, NIKE — next earnings date.