Citi downgraded Nike from buy to neutral
Price target cut from $102 to $72
Stock down 31% over past 12 months
New CEO Elliott Hill failed to convince analysts
Concerns over FY26 sales and margin targets
Facing competition from Hoka, On, Birkenstock
Potential China market share loss from tariffs
Margin pressures expected beyond FY25
Opinion
Nike's situation shows deeply troubling signs of structural weakness. The inability of a CEO change to restore confidence suggests more fundamental problems beyond leadership, while the emergence of smaller, nimble competitors threatens Nike's traditional market dominance. Most concerning is how multiple headwinds - from margin pressure to tariffs to competitive threats - are converging simultaneously, suggesting potential for a longer and more severe downturn than previously anticipated.
Core Sell Point
The combination of intensifying competition from smaller brands, margin pressures, and international trade risks suggests Nike faces a potentially prolonged period of market share erosion and profitability challenges that could fundamentally alter its competitive position.
A new CEO at the helm hasn’t convinced Citi that Nike can successfully pull off a comeback. Analyst Paul Lejuez downgraded shares of the athletic footwear and apparel retailer to a neutral rating from buy, simultaneously slashing his price target to $72 from $102. This updated forecast is fractionally higher than Nike’s Thursday closing price of $71.74. Shares of Nike have tumbled 31% over the past 12 months. NKE 1Y mountain NKE 1Y chart Citi’s decision followed a sell-side event to meet new Nike CEO Elliott Hill, on whom analysts have pinned hopes of a long turnaround for the brand . But Lejuez came away from the meeting feeling less reassured. “After discussing the key building blocks and challenges to achieve a turnaround, we no longer believe F26 will inflect the way we hoped, either on the sales or EBIT margin line. Topline pressures seem likely to continue as they manage down key franchises further in F26, without enough new product at scale to fill the void,” the analyst wrote. “We believe F26 consensus ests are too high, making the turnaround timing much less visible, and we no longer have the patience or conviction to wait another year,” the analyst added. Besides continuing sales pressures, Lejuez also highlighted margin headwinds resulting from taking product off the marketplace and from newer products as another obstacle for the company. Albeit short term, these pressures will likely persist beyond fiscal 2025, resulting in another down margin year in 2026. Meanwhile, a U.S.-China tariff war could mean market share loss among Chinese customers, while Nike’s attempts to offload current product through off-price deals could hurt the demand of new full-price launches. Lejuez also pointed to smaller competitors such as Hoka, On and Birkenstock as another emerging threat. “Smaller brands like Hoka, On, Birkenstock all have significant momentum, and are looking to expand into products that will compete with NKE in some way; NKE may have a hard time disrupting the momentum, making it difficult to gain back shelf space with wholesale partners,” he wrote.
