Nike Downgrade as BofA Cuts Price Target
Bank of America's Nike downgrade cut the price target to $30 and trimmed EPS, prompting traders to reassess valuation and near-term position sizing.
KEY TAKEAWAYS
- BofA downgraded Nike to Underperform and cut its price target to $30.
- It trimmed fiscal-2027 EPS by 11.0% and fiscal-2028 EPS by 12.0%.
- BofA expects negative sales growth through fiscal 2027 and delays recovery into fiscal 2028.
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Nike Inc. (NKE) shares fell after Bank of America downgraded the company on September 25, 2026, citing weaker wholesale momentum, pressure on classic products, and headwinds in China that could delay the company’s turnaround.
Rating and Valuation
Bank of America lowered Nike’s rating from Neutral to Underperform and cut its price target to $30 from $47. The new target applies a 16-times price-to-earnings (P/E) multiple, down from 22 times, aligning with the peer average. This reduced multiple reflects a narrower valuation premium and signals a more cautious growth outlook. The bank’s adjustment makes future upside dependent on clearer evidence that Nike can restore sales and margin momentum.
BofA trimmed its fiscal 2027 earnings per share (EPS) estimate by 11.0% and its fiscal 2028 EPS estimate by 12.0%. Its fiscal 2027 EPS projection is 14.0% below Visible Alpha consensus. These cuts reduce the earnings base that supported earlier, higher targets and increase valuation sensitivity to execution and revenue trends. The divergence from consensus highlights BofA’s more cautious earnings outlook.
The bank also noted that Nike’s dividend payout ratio exceeds 100% and lowered its income-rating assessment from 8 to 7. This raises concerns about the sustainability of shareholder returns if profits remain under pressure and reduces the stock’s appeal on an income basis compared with peers under the revised assumptions.
Sales Outlook and Operational Challenges
BofA now expects negative revenue growth through fiscal 2027, pushing the anticipated recovery into fiscal 2028, about one year later than previously forecast. Extending the period of declining sales delays margin improvement and cash-flow normalization that underpinned earlier, more optimistic projections. This shift turns a near-term inflection into a longer trough, increasing the importance of wholesale execution and inventory discipline.
The downgrade reflects a combination of operational and market pressures, including weakening product innovation, inventory-related challenges, and deteriorating macroeconomic and channel conditions. These factors can reduce sell-through rates and force promotional activity that compresses gross margins. BofA views this mix as unlikely to improve quickly without sustained progress in product development and channel performance.
Together, the valuation and earnings revisions reshape Nike’s near-term investment case, emphasizing the need for visible improvements in product cycles, wholesale stabilization, and demand recovery in China. Without measurable progress on these fronts, the bank’s more conservative framework narrows the window for a valuation re-rating.
