NKE Stock Wrapped Its Best Week In 3 Months: Analyst Says Nike Will Recover From ‘Lackluster Product Development,’ Shares Undervalued

Morningstar expects innovation, marketing, retail partnerships, and $2.5 billion in cost savings to support a long-term recovery.

• Morningstar lowered Nike’s competitive advantage rating as rivals like Hoka and On gain ground. 
• Nike’s U.S. footwear market share dropped to 30% as retailer relationships weakened, but its strong brand keeps the stock undervalued. 
• Under CEO Elliott Hill, Nike plans to save $2.5 billion through job cuts and restructuring.

Nike Inc. (NKE) stock wrapped up its best week in three months, with Morningstar saying the sportswear giant’s shares remain undervalued despite mounting competition and a weaker outlook. The analyst cut Nike’s fair value estimate but expects innovation, stronger marketing and improved retail partnerships to support a recovery. 

Nike stock edged 0.05% lower in Monday’s premarket

Competition Weakens Nike’s Edge

Morningstar analyst David Swartz reduced Nike’s economic moat rating to ‘narrow’ from ‘wide.’ The analyst believes Nike retains a powerful brand, premium pricing, and valuable relationships across professional sports. Swartz also added that Nike stock is still undervalued. However, newer rivals, including Deckers Brands (DECK) through its Hoka brand and On Holding AG (ONON), have intensified pressure on Nike’s lead in performance footwear.

Nike’s share of the U.S. sports shoe market dropped to 30% in 2025 from 40% in 2016. Morningstar said Nike’s focus on direct sales hurt relationships with retailers and caused the brand to lose some loyal customers. The analyst sees Nike as a leader in sportswear and expects it to recover from problems including “lackluster product development, soft sportswear demand, and strained relationships with wholesale accounts.”

Nike’s Fiscal 2027 Outlook Remains Challenging

Morningstar expects Nike’s sales to decline 8% in fiscal 2027, compared with its previous forecast of a 2% decline. The analyst also lowered the operating margin outlook to 5.9% from 6.8% and slashed the earnings-per-share estimate to $1.16 from $1.69.

The firm now sees annual sales growth of 3% over the coming decade, down from 5%. Its peak operating margin forecast fell to 14% from 18%, reflecting mounting competition and slower growth in key markets, specifically China.

Innovation And Cost Cuts Drive Nike’s Turnaround Plans

Under CEO Elliott Hill, Nike is working to strengthen retailer relationships, improve product development and reconnect with athletes and sports communities worldwide. The company is also pursuing a restructuring program designed to bring in $2.5 billion in savings over four years through job cuts and fewer management layers.

Morningstar expects Nike to redirect some of those savings toward technical development, marketing and a more responsive supply chain. The analyst believes these investments could help restore sales momentum and lift operating margins toward 14% over the next decade.

China And Consumer Demand Pose Risks For Nike 

Nike’s recovery in China remains uncertain as domestic competitors gain ground and consumer traffic weakens. Morningstar reduced its forecast for the region’s annual sales growth over the next decade to 1% from 9% previously. Tariffs, higher energy costs and inflation also threaten profit and consumer spending.

Despite the challenges, Morningstar expects Nike’s strong brand to help it earn returns above its 9% capital cost. The analyst also expects Nike to maintain a dividend yield above 4%, although weak results may limit buybacks. 

NKE stock: Retail View 

On Stocktwits, retail sentiment around the stock slipped to ‘bearish’ from ‘neutral’.

NKE stock has crashed over 41% year-to-date. 

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