TLDR
- Nike shares declined over 1% in Tuesday’s premarket session, approaching a 13-year low.
- Berenberg downgraded the stock to Sell from Hold, slashing the price target from $49 to $27.50.
- The athletic apparel company has lost 47% of its value in 2026 and trades 81% beneath its November 2021 peak.
- Buy ratings from analysts have fallen to 26%, marking the weakest bullish sentiment in two decades.
- Berenberg projects fiscal 2027 earnings per share of $1.08, significantly below consensus, citing unresolved margin pressures.
Nike stock fell more than 1% during Tuesday’s premarket hours, positioning the shares to potentially hit their weakest closing price in over a decade.
The selloff intensified after Berenberg issued a downgrade, moving the athletic footwear giant from Hold to Sell while dramatically reducing the price objective from $49 down to $27.50.
Berenberg analyst Nick Anderson stated that Nike has effectively conceded a reduced position within the competitive sportswear industry. In his Tuesday morning research note, he characterized the structural market transformation as “irreversible.”
This downgrade arrives mere days following Nike’s fiscal first-quarter financial results released last Thursday. Investor enthusiasm dampened after management projected a high-single-digit percentage revenue contraction extending through May 2027 for fiscal year 2027.
The stock’s performance throughout 2026 has been notably poor. Year-to-date losses total 47%.
Looking at the longer timeline reveals an even grimmer scenario. The stock currently trades 81% beneath its all-time closing peak reached in November 2021.
Performance Segments Show Strength While Lifestyle Categories Struggle
Berenberg’s research team identified certain positive elements within the quarterly report. Categories including running, football, North American basketball, tennis, and golf each delivered double-digit revenue expansion during the period.
However, the broader lifestyle sportswear segment, representing approximately half of total company revenue, contracted by a low-double-digit percentage. The Jordan brand experienced a mid-teens percentage decline, creating additional headwinds for overall performance.
This softness largely explains Nike’s forecast calling for high-single-digit revenue erosion throughout fiscal 2027, Berenberg noted. The China market presents the most significant challenge among all regions.
Despite occupying a central role in Nike’s “Win Now” strategic turnaround initiative launched in December 2024, Chinese revenue is anticipated to continue declining for at least one more quarter. Berenberg emphasized that restoring brand strength in that market will require years of effort, not just a few quarters.
Financial Projections Slashed Dramatically
Berenberg reduced its revenue forecasts for Nike by 6.5%, 11%, and 13% across fiscal years 2027, 2028, and 2029 respectively. Earnings per share projections suffered even steeper reductions of 38%, 46%, and 34% during that same timeframe.
The investment firm currently anticipates fiscal 2027 EPS of merely $1.08. Additionally, Berenberg highlighted management’s notable absence of gross margin guidance for fiscal 2027, interpreting this omission as a concerning signal.
Nike’s restructuring initiative, dubbed Pace, won’t deliver meaningful benefits until fiscal 2029, according to expectations. While the program aims to generate $2.5 billion in cost savings through fiscal 2031, the majority of these benefits won’t materialize until 2029 and 2030.
Conversely, $1 billion in pre-tax restructuring charges hit the income statement earlier in the timeline, creating near-term financial strain. Berenberg described this timing mismatch as an unfavorable scenario for investors seeking rapid improvement.
The firm’s revised $27.50 price objective was calculated by applying Adidas’s historical 20-year average price-to-earnings ratio to Nike’s projected fiscal 2029 earnings per share. Berenberg contends that Nike’s valuation premium relative to competitors has become unjustifiable.
Analyst sentiment on Wall Street has shifted decisively negative. Only 26% of analysts tracking Nike currently maintain Buy recommendations on the shares.
This represents the smallest percentage of bullish ratings in a minimum of 20 years, based on FactSet records. Nike did not provide an immediate response to requests for comment regarding the downgrade.
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