Truist Securities downgraded Nike to neutral from buy, citing a dimmer outlook for the footwear giant following an update from Dick's Sporting Goods that clouded its recovery trajectory.
The brokerage also lowered its price target on Nike to $42 from $47, reflecting a more cautious stance amid shifting market conditions. Truist simultaneously adjusted its rating on Dick's Sporting Goods to neutral from buy, reducing its price target to $135 from $270.
The reassessment follows Dick's Sporting Goods' announcement, which Truist said signals a growing fog surrounding Nike's recovery progress. The retailer's guidance cuts underscore concerns over inventory normalization and weakening brand momentum in the footwear segment.
Truist analyst Joseph Civello noted that Nike's business with Foot Locker returned to growth in June for the first time in four years, a development that had previously supported a more constructive view. However, the brokerage now believes it prudent to step back until clarity emerges on both the inventory cleanup process and the product pipeline expected for 2027.
The downgrade also reflects pressures from legacy product designs that have lost traction and underwhelming performance of second-quarter launches. Truist had previously highlighted strong momentum in the running category and improving visibility on inventory levels as reasons for its cautious optimism.
Nike is scheduled to report its next earnings on September 24.
