Nike’s China Bet Is Under Pressure And Wall Street Is Losing Confidence – Analysts Warn Return To Growth Could Take 4 Quarters

• Nike CEO Elliott Hill stated that the company’s turnaround strategy in Greater China is still in its early stages of a comeback, while adding that the efforts are taking longer to fructify than he would like.
• Analysts on Wall Street expressed concerns with Nike’s turnaround efforts, warning that a return to growth could take as long as four more quarters.
• Goldman Sachs stated that it is “incrementally cautious” with respect to Nike’s timeline of recovery following the Q3 results, while highlighting that the Chinese market is under “particular pressure.”

Nike Inc. (NKE) shares tanked more than 11% in Wednesday’s pre-market trade, on track to fall to a low of more than 11 years after the company’s fourth-quarter (Q4) guidance fell short of Wall Street expectations.

Nike expects Q4 revenue to decline between 2% and 4% year-on-year (YoY), implying a range of $10.66 billion and $10.88 billion. This is lower than the consensus estimate of $11.3 billion, according to Fiscal.ai data.

After a 7% decline in sales in the Chinese market in the third quarter (Q3), Nike said it expects a 20% decline in Q4.

Nike CEO Elliott Hill stated that the company’s turnaround strategy in Greater China is still in its early stages of a comeback, while adding that the efforts are taking longer to fructify than he would like.

Retail sentiment on Stocktwits around Nike trended in the ‘extremely bullish’ territory at the time of writing, with message volumes at ‘extremely high’ levels.

Wall Street Concerned

Analysts on Wall Street expressed concerns with Nike’s turnaround efforts, warning that a return to growth could take as long as four more quarters.

According to TheFly, JPMorgan downgraded Nike to ‘Neutral’ from ‘Overweight’, while lowering the price target to $52 from $86. The firm flagged the time-consuming turnaround efforts, while trimming fiscal 2027 and 2028 earnings estimates below the consensus.

Goldman Sachs analysts downgraded Nike to ‘Neutral’ from ‘Buy’, while slashing the price target to $52 from $76. The firm stated that it is “incrementally cautious” about Nike’s recovery timeline following the Q3 results, while noting that the Chinese market is under “particular pressure.”

Barclays trimmed its price target for NKE stock to $67 from $73 while maintaining an ‘Overweight’ rating. The firm highlighted the slow speed of the Greater China reset, adding that it is “likely to take four quarters to return to growth.”

Piper Sandler analysts noted that Nike’s guidance for flat earnings per share (EPS) over the next nine months was significantly below expectations. The firm trimmed its price target for Nike to $60 from $75 while keeping an ‘Overweight’ rating.

How Did Retail Traders React?

NKE was the top trending ticker on Stocktwits at the time of writing.

One user highlighted that people can barely afford groceries and the sky-high gas prices, while asking where the buyers are for a $220 pair of Air Jordans.

Another user stated that while they were buying Nike shoes at one point, they have now switched to Asics.

NKE stock is down 17% year-to-date. The S&P 500 ETF Trust (SPY) is up 16% over the past 12 months, while the Vanguard Total Stock Market Index Fund ETF (VTI) is up 17%.

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