Nike Inc. (NYSE: NKE) shares came under renewed pressure on Friday after Bank of America analyst Lorraine Hutchinson downgraded the athletic footwear giant to underperform, signaling that the stock may not have found its bottom yet. The new price target of $30 implies an additional 15% downside from current levels, adding to what has already been a painful year for investors.
Nike's stock has tumbled roughly 45% from its year-to-date high, making it one of the worst-performing large-cap consumer names in 2026. Hutchinson's bearish call is particularly notable because it comes after such a steep decline, suggesting that the market may still be pricing in too much optimism regarding a recovery.
Why BofA Downgraded Nike Stock
The downgrade is rooted in expectations of prolonged revenue weakness across major athletic footwear segments. Hutchinson now projects negative top-line growth through the coming year, pushing any meaningful operational turnaround into fiscal 2028. While Nike continues to launch fresh product innovations, these efforts are being overshadowed by sharp declines in core lifestyle franchises and classic footwear lineups.
Wholesale channel trends in North America are also flashing warning signs. Sell-through performance has failed to match wholesale shipments, forcing cautious retailers to re-evaluate their forward order books. This inventory overhang is a critical issue, as it could lead to discounting and margin pressure in the near term.
Adding to the strain, Nike's Greater China sales have crashed 17% in recent quarters, further eroding the company's revenue base. The combination of weak domestic wholesale trends and deteriorating international demand paints a challenging picture for the company's near-term prospects.
BofA Lowers Estimates for Nike's 2027 and 2028 Earnings
In her research note, Hutchinson also flagged growing risks regarding Nike's financial profile, earnings visibility, and dividend durability. She reduced her fiscal 2027 and fiscal 2028 earnings per share (EPS) estimates by 11% and 12%, respectively. Her fiscal 2027 EPS projection of $1.43 is roughly 14% below consensus expectations.
With earnings under pressure, Nike's projected dividend payout ratio rises to a concerning 107% for fiscal 2027. This prompted BofA to downgrade its income rating due to risks that the payout may remain flat or face restructuring. Consequently, Hutchinson lowered Nike's valuation multiple to about 16 times earnings, aligning it closer to broader peer group averages.
NKE Shares in Focus Ahead of Earnings on October 1
As Nike prepares to release its fiscal Q1 earnings report on October 1, Wall Street sentiment is becoming increasingly divided over how quickly management can engineer a turnaround. While consensus estimates anticipate a revenue decline of 2.4% to $11.4 billion, BofA's research indicates that profit margins and bottom-line stability will remain entirely reliant on aggressive cost reductions and gross-margin controls rather than organic demand.
With e-commerce restructuring adding near-term top-line friction and channel partners scaling back commitments, Bank of America warns that sentiment has further room to deteriorate. Investors hoping for a quick cyclical bounce may find that NKE stock has yet to establish a firm valuation floor. The footwear giant is currently trading firmly below all of its key moving averages, indicating that bears remain in control across multiple timeframes.
This article is for informational purposes only and does not constitute financial advice.
