Nike Downgraded to Sector Perform, FY27 EPS Cut 9%, Price Target $50
NKE•RBC Capital Markets downgraded Nike to Sector Perform from Outperform and lowered its price target to $50 from $70, cutting FY27 and FY28 EPS estimates by 9% and 13%. The firm cited a slower-than-expected turnaround under CEO Elliott Hill, widening wholesale-to-DTC sell-out gap and lack of near-term catalysts.
1. RBC Downgrade and Price Target Cut
RBC Capital Markets downgraded Nike to Sector Perform from Outperform, lowering its price target to $50 from $70. The revision reflects slower progress in Nike’s turnaround under CEO Elliott Hill and a lack of near-term catalysts to drive growth.
2. EPS Forecast Reductions and Share Performance
RBC trimmed Nike’s fiscal 2027 and fiscal 2028 EPS estimates by 9% and 13%, positioning both roughly 2% below consensus. Since Hill’s October 2024 appointment, Nike shares have fallen about 50%, while 12-month forward EPS projections have been revised down roughly 40%.
3. Sales Channels and Inventory Dynamics
The bank highlighted a widening gap between wholesale sell-in and direct-to-consumer sell-out in North America, noting that a full-price DTC recovery is key and should improve through FY27 as comparatives ease. The impending Dick’s Sporting Goods-Foot Locker merger, representing 11% of Nike’s revenue, is expected to enforce tighter buying discipline and cut around 30% of underperforming styles.
4. Competitive Pressures and Growth Outlook
Nike has lost over 4 percentage points of sports footwear market share since 2023 to brands such as On Running, New Balance and Hoka, while premium women’s apparel rivals have strengthened. RBC projects Nike’s three-year revenue growth at 3%—below the sector average of 6%—and warns that normalizing valuation multiples could reduce fair value to $34–$38 per share.
