Truist Securities downgraded Nike to Hold from Buy on Wednesday, citing concerns over the sportswear giant's turnaround progress following an update from Dick's Sporting Goods that clouded visibility into recovery efforts.
The brokerage also cut Dick's Sporting Goods to Hold from Buy, lowering its price target to $135 from $270. Nike's target was reduced to $42 from $47. The downgrades reflect what Truist described as 'incremental murkiness' around Nike's recovery trajectory, particularly after Dick's cited deteriorating footwear trends in its guidance update.
Truist had previously maintained a cautiously optimistic stance on Nike, citing strength in running launches and improving visibility into cleaner marketplace inventories, with U.S. wholesale identified as a key positive. However, the firm now believes Dick's underestimated the scale of inventory cleanup required and noted a decline in brand heat. Management highlighted that legacy silhouettes are no longer resonating as they once did, while second-quarter launches underperformed expectations.
Analyst Joseph Civello stated that investors should move to the sidelines until there is greater clarity on both the cleanup process and the pipeline of newness scheduled for 2027. Civello also raised questions about the ability of the new product pipeline to generate full-price selling at scale.
Nike's Foot Locker business had returned to growth for the first time in four years, as noted during the company's earnings call on June 30. The outlook for 2027 remains a focal point as the market awaits further signals on recovery and demand normalization.
