RBC Capital Markets brought its 12-month price target for the athletic apparel giant down from $70 to $50 on slower revenue growth than previously expected.
Shares in Nike (NKE) have fallen 1.5% in pre-market trading to $43.98, with stock down by about 30% in the past six months. It comes the day before the World Cup begins, and as rival, and official partner of the soccer tournament, adidas (XE:ADS) has risen about 4% in the same period.
Analysts at the investment bank, led by Piral Dadhania, head of luxury and premium brands equity research, wrote that while Nike’s turnaround under its CEO Elliot Hill, who took the helm in October 2024, is making progress, it’s slower than predicted.
The main challenge the Beaverton, Ore.-headquartered company is facing is exciting consumers with its product range, the analysts wrote.
Dadhania noted that the initial price target of $70 was based on the assumption of accelerated revenue growth throughout 2026, supported by a boost in sales driven by the World Cup. But he now doesn’t expect to see the positive results of Hill’s turnaround plan, involving repairing relationships with wholesale partners and launching more sport-focused products, until the following year.
The bank also reduced its profitability forecasts by 9% in 2027 and 13% in 2028, bringing RBC’s estimates 2% below Wall Street consensus.
Dadhania highlighted Nike’s risk of losing market share because of its outlook for revenue growth of just 3% – lower than an unweighted sector average of 6%. While the company’s lifestyle footwear is market-leading, it lags behind Hoka and New Balance when it comes to running shoes. In women’s clothing, relative newcomers Vuori and Alo Yoga as well as Lululemon (LULU) lead in premium price positioning, he wrote.
Nike shoes also account for almost half of retailer Foot Locker’s discounted stock in U.K. and U.S. stores. Dadhania explained that while this partially represents the fact that Nike products account for about 60% of Foot Locker’s total revenue, “lower quality inventory and/or softer sell through rates” may also be to blame.
