Nike down after JPM downgrades on mounting challenges for Hill's turnaround
NKE•JPMorgan turns bearish on Nike
- Nike shares were down 3.5% at $41.15 after J.P. Morgan downgraded the stock to underweight from neutral.
- J.P. Morgan also cut its price target on the sportswear maker to $40 from $47.
- Three out of 42 brokerages currently rate the stock sell, with a median price target of $47.
- J.P. Morgan said Nike's years-long turnaround effort, launched under CEO Elliott Hill in December 2024, looks likely to be a drag on Nike's results into the first half of 2028.
- Nike has said its efforts to revive demand in China and for its Converse brand "will take more time" even as it makes progress in North America.
China and competition add to the pressure
- The brokerage said Nike's decision to pull online sales rights from some retail partners in China points to an annualized revenue headwind of about $1 billion in the region.
- Slowing category growth for global sportswear, where Nike is trying to rebuild product and customer ties, adds to the challenges, J.P. Morgan analysts noted.
- They also said robust competition from upstart brands such as On and Hoka raises the question of consumers shifting away from brand loyalty to multi-brand trial, which could further eat into Nike's market share.
- NKE shares are down about 33% year to date and have fallen nearly 44% since December 2024.
