NKE Downgraded To ‘Sell’ At Truist As Analyst Flags ‘Numerous Issues’ Despite Nike’s Recent Rally

Truist attributed Nike's 19% monthly rally to sector rotation, flagging Jordan inventory, China uncertainty, and tough comparisons.

• The firm also reportedly pointed to tough comparisons following World Cup-driven sales and substantial shipments to U.S. wholesale partners over the past 12 months.
• 25 out of 43 analysts covering the stock rate it ‘Hold’, whereas 10 rate the stock ‘Buy’ or ‘Strong Buy’ and eight rate the stock ‘Sell’ or ‘Strong Sell’, according to Koyfin data.
• Morgan Stanley lowered its Nike price target to $25 from $27 on Wednesday, maintaining an ‘Underweight’ rating and estimating normalized sales of about $40 billion, 15% below FY31 consensus.

Nike's (NKE) shares drew investor attention on Thursday after Truist highlighted valuation concerns, saying the stock's recent rally does not reflect an improvement in the company's underlying fundamentals.

Truist downgraded Nike to ‘Sell’ from ‘Hold,’ while maintaining its price target of $29, according to TheFly. The analyst said the stock's 19% gain over the past month was driven by positive sector rotation rather than improving fundamentals.

NKE shares traded 1.5% lower in premarket trading at the time of writing. The stock gained over 9% in the last week.

Twenty-five out of 43 analysts covering the stock rate it ‘Hold,’ whereas 10 rate the stock ‘Buy’ or ‘Strong Buy’ and eight rate the stock ‘Sell’ or ‘Strong Sell,’ according to Koyfin data. Their 12-month price target ranges from $19 to $60, with an average of $36.45.

Truist Highlights Inventory And China Challenges

The analyst said Nike continues to face ‘numerous issues,’ including retro Jordan product launches sitting on shelves, limited visibility into when sales in China could bottom out, and tough comparisons, according to TheFly.

Separately, Investing.com reported that Truist highlighted Nike's expanding valuation, with its forward fiscal-year-two price-to-earnings multiple increasing by six turns to 27x, nearly twice the peer average.

Investing.com also reported that Truist flagged difficult comparisons following World Cup-related sales and significant sell-in to U.S. wholesale channels over the past 12 months. The firm additionally pointed to a tougher outlook for Nike's Running category, despite the company's recent progress in the segment.

Morgan Stanley Sees Further Sales Reset Ahead

In a separate note published on Wednesday, Morgan Stanley lowered its price target on Nike to $25 from $27 and maintained an ‘Underweight’ rating, according to The Fly.

The firm said three independent revenue analyses pointed to normalized Nike sales of approximately $40 billion, around 15% below consensus forecasts for FY31. With Nike's investor day expected to outline its targets through FY31, Morgan Stanley said the company's ‘sales reset is far from over, with 2+ additional years possibly ahead’, The Fly reported.

Nike's China Weakness And Brand Reset Weigh On Recovery

Nike reported a 4% year-over-year decline in fiscal first-quarter 2027 revenue, missing analyst expectations, and forecast a high-single-digit percentage decline in revenue for the full fiscal year. 

Greater China remained a major weakness, with revenue falling 26% on a currency-neutral basis. CEO Elliott Hill said Nike was working to reduce deep discounting in the region by eliminating distribution through channels that do not align with its marketplace strategy. The company plans to concentrate its digital presence around official storefronts on Tmall, JD and Douyin, alongside Nike.com and its app.

Nike's Sportswear and Jordan businesses remained significant drags on overall revenue, with sales declining at low-double-digit and mid-teens rates, respectively. Running and Global Football, however, recorded double-digit growth during the quarter.

How Retail Views NKE

On Stocktwits, retail sentiment around the stock remained ‘bearish’ over the past 24 hours.

One bullish user said retail stocks have broken through a major resistance level and expects Nike to follow suit, potentially driving another rally. But the user also cautioned that it remains to be seen whether the gains can be sustained.

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NKE shares have dropped over 33% year-to-date.

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