Morgan Stanley Warns Nike Earnings Recovery May Take Longer

Nike's (NKE) stock has been under pressure in recent months, and Morgan Stanley is warning that the pain may not be over yet. The financial firm resumed coverage on Nike with an 'Underweight' rating and a price target of $31, implying roughly 20% further downside from current levels.

The analyst calls into question Wall Street's optimism about Nike's earnings recovery, citing weak China sales and a turnaround that is taking longer to show results. In the fourth quarter of fiscal 2026, Nike reported a 17% decline in Greater China revenue, marking another quarter of weakness in the region.

Nike has been changing how it sells products in China as it tries to improve pricing and reduce discounting. Beginning in January 2027, the company plans to limit online sales by wholesale partners and place greater emphasis on Nike-controlled digital channels. Analysts estimate that this reset could result in a $500 million to $1 billion sales impact.