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Skip NavigationMarketsBusinessInvestingTechPolitics & PolicyVideoWatchlistInvesting ClubPROLivestreamMenuNike faces a risky path to turning around its struggling business, so investors should sell their shares, according to Bank of America. The investment bank downgraded the sportswear stock to underperform from neutral. It also lowered its price target on shares to $30 from $47, implying nearly 17% downside from Thursday’s close. “Risks are rising,” analyst Lorraine Hutchinson said Friday in a note to clients. She warned there is downside risk to earnings estimates and Nike’s stock price as its innovation continues to be overshadowed by its “pressured classics business” amid sluggishness in the category. “We now expect negative sales growth through F27E versus our prior view of a Spring inflection,” she said. “Our F27E EPS is 14% below VA consensus. The dividend payout ratio is over 100% and, as a result, we are reducing our income rating to 8 (same/lower) from 7 (same/higher). Our $30 PO (was $47) is based on a 16x P/E (was 22x), now aligned with the peer average.” Shares of Nike have fallen 47% over the past year as Nike has faced several macroeconomic challenges, including tariff hikes that have threatened to complicate its “Win Now” strategy to recover from its sales slump in recent years. NKE YTD mountain Shares are down 47% over the past 12 months. Bank of America sees shares plunging even deeper into the red, particularly as the sneaker maker also struggles to lift sales in China, which is a critical market. The “China reset faces a tougher demand backdrop,” Hutchinson wrote. “China is in flux, and Nike’s reduction in partner online sales will likely cause promotional pressure through [the second quarter] …Competition is intense; the quest for newness is higher than ever, and we see risk that sales decline at least through [fiscal year 2027].” The analyst noted that she expects negative sales growth through the end of the current fiscal year versus her prior call for a spring inflection. She also lowered her estimates for Nike’s fiscal 2027 and 2028 earnings per share by 11% and 12%, respectively. Wall Street has soured on Nike, with five analysts downgrading the stock since the beginning of August. Of the 44 analysts covering Nike, 26 have a hold rating, LSEG data shows.Read More