Goldman Sachs downgrades Nike to Sell on declining market share

Goldman Sachs has taken a bearish stance on Nike, downgrading its stock rating from Neutral to Sell and slashing its price target to $27.50 from $49.00. The move comes as Nike's stock, currently trading at $33.96, has dropped over 50% in the past year, nearing its 52-week low of $31.97. Analysts are revising earnings downward, with revenue expected to decline 8% in fiscal 2027.

The investment firm suggests that Nike appears to be accepting a smaller role in the sportswear market. While the performance business is holding up, the broader sportswear category is struggling, leading to a projected high single-digit percentage sales decline for fiscal 2027. Goldman Sachs interprets Nike's strategic shift to focus on smaller areas as an admission that the market structure has permanently changed against the company.

China remains a significant challenge, with sales expected to contract further this year despite being a core focus of Nike's Win Now actions since December 2024. With revenues under pressure through fiscal 2028 and limited help from the Pace restructuring plan until fiscal 2029, Goldman Sachs sees little reason to remain optimistic about Nike's near-term prospects.

Despite the downgrade, some analysts believe Nike remains undervalued at current levels compared to its Fair Value. Recent mixed ratings from other firms highlight the varied perspectives on Nike's financial and strategic position. Freedom Broker upgraded Nike to a Buy, citing its restructuring plan, while BNP Paribas Exane maintained an Underperform rating due to weak guidance.