JPMorgan cuts Nike to Underweight, sees EPS well below consensus

Investing.com -- JPMorgan downgraded Nike to Underweight from Neutral in a note Tuesday, warning investors that the financial impact of the company's turnaround decisions will linger far longer than the Street expects, pressuring earnings through fiscal 2028.

Analyst Matthew Boss said recent management access and fieldwork clarified that "Win Now" decisions made through the end of calendar 2026 "will linger and impact NKE's P&L in 2H27 and into FY28."

Two actions are said to stand out. In Greater China, a reset of Nike's online marketplace beginning in January 2027 points to what JPMorgan calls an "unmitigated" revenue headwind of more than $1 billion annually, or about 20% of the region's revenue.

In North America, a wave of U.S. store closures leaves a headwind running through the first half of fiscal 2028.

As a result, JPMorgan said the Street is "mis-modeled" for the second half of fiscal 2027, which consensus expects to accelerate.

The firm lowered its fiscal 2027 EPS estimate to $1.55, roughly 10% below consensus, and its fiscal 2028 estimate to $1.72, about 20% below the Street, framing fiscal 2028 as a "stabilization" year rather than one of growth.

The bank also questioned the category backdrop, noting global sports apparel and footwear "is increasingly screening as a maturing category," with North American growth cut to 3%.

JPMorgan set a December 2027 price target of $40, down from $47, based on about 21 times its calendar 2028 EPS estimate. It expects Nike to outline a three-year plan targeting double-digit operating margins by fiscal 2030 at its November investor day.

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