KeyBanc Capital Markets lowered its rating on Nike Inc. to “Sector Weight” from “Overweight” due in part to sportswear challenges, international headwinds, and the loss of share to a range of competitors.
Ashley Owen, lead analyst in the space at KeyBanc, also cited a less-than-expected benefit from the World Cup and the upcoming CFO change in the stock downgrade. She slightly lowered her estimates for FY27 due to “modestly higher” headwinds in China and the EMEA region.
Nike is due to report quarterly earnings after the market closes this Tuesday, June 30.
In her note, Owen said that while KeyBanc upgraded Nike’s stock last September on recovery prospects, the turnaround is “taking longer to materialize than expected, with the outlook further clouded by China/EMEA uncertainty, ongoing marketplace headwinds, and another mgmt. transition.”
The analyst said that while some of Nike’s “Win Now” actions are making progress, including resuming growth in North America and the running category and regaining space within the wholesale channel, “efforts to rightsize sportswear and pressure in Greater China have not been addressed as quickly as we initially expected, while a reversal in trends in EMEA raises additional concerns.”
Owen added that although KeyBanc’s 1Q26 Footwear Survey, taken from April 15 to 19, showed Nike’s mindshare “remains strong and healthy,” consumers have more credible options when shopping for athletic apparel and footwear than in Nike’s recent heyday. Owen wrote, “We believe that consumers are not as brand-agnostic as they once were, with share continuing to shift towards ‘disruptor’ brands, which is likely aiding in a longer pathway toward recovery/elongated marketplace cleanup actions.”
The report cites a Brand Health metric from KeyBanc’s first-quarter footwear survey that measures whether a brand’s demand is improving or weakening based on consumer preference (favorite brand) and purchase penetration indexed to each brand’s own historical baseline.
The analysis found that the brand health of Adidas, On, Reebok, and New Balance was all “meaningfully above their historical baselines, signaling sustained improvements in brand equity and consumer engagement.” Nike and Puma saw “stronger brand health q/q, but improvements were more moderate in nature.” Skechers, Hoka, Crocs, Vans, Under Armour, and Converse remain below their historical baselines. Owen added in the note, “Within this, Crocs and Hoka are only slightly lagging behind prior survey history, while the other brands look to be facing more pressure.”
Among other triggers for the downgrade, Owen said the wide range of “”all pink” launches from this year’s boot lineup blurs the brand distinction NKE was looking for, with upside in boot sales from the event looking more limited, in our view.”
Nike, Adidas, Puma, Skechers, and New Balance have all released boots in similar pink colorways.
Finally, Owen said Nike’s announcement last week that Pfizer CFO David Denton would replace current CFO Matt Friend in August “could drive incremental cleanup actions that are currently not contemplated, further elongating the recovery timeline and warranting a potential delay of the Investor Day slated for this fall.”
KeyBanc removed its price target on Nike. Its previous price target was $75.
On its valuation, Owen said Nike continues to trade at a premium to the broader apparel group despite recent challenges. The analyst wrote, “Though the name sits at a 52-week low, we see further potential for correction NT [near term], particularly if the FY27 guide disappoints or extends the timeline toward stabilization.”
Nike’s shares closed Friday at $40.75, down from $63.71 at the start of the year. The stock’s all-time closing price of $163.63 was reached in November 2021.
Image courtesy Nike
