Goldman Sachs Downgrades Nike to Sell Amid Market Share Concerns

Goldman Sachs has downgraded Nike's stock rating from Neutral to Sell, slashing its price target to $27.50 from $49.00. The move comes as Nike's stock trades at $33.96, down over 50% in the past year and near its 52-week low of $31.97. Analysts expect an 8% revenue decline in fiscal 2027, with 12 analysts revising their earnings downwards for the upcoming period.

The firm suggests Nike has accepted a smaller role in the sportswear market. While the performance business remains strong, the broader sportswear category continues to struggle, driving a guided high single-digit percentage decline in fiscal 2027 sales. Goldman Sachs views Nike's strategy of focusing on smaller areas as an admission that market dynamics have shifted against the company.

China presents a significant challenge, with sales expected to contract further this year despite being a core focus since December 2024. Revenues are under pressure through fiscal 2028, and management's outlook appears cautious. The Pace restructuring plan is not expected to provide meaningful help until fiscal 2029, contributing to the downgrade.

Despite these challenges, InvestingPro analysis suggests Nike remains undervalued at current levels compared to its Fair Value. Recent earnings reports showed a revenue miss, with notable declines in Greater China and the EMEA region. However, gross margin and earnings per share posted slight beats due to high single-digit growth in performance products.

Analysts have mixed views on Nike's future. Freedom Broker upgraded the stock to Buy, citing the restructuring plan, while BNP Paribas Exane maintained an Underperform rating. Piper Sandler cut its price target but kept a Neutral rating, and KeyBanc reiterated a Sector Weight rating, acknowledging Nike's multi-year transformation strategy.