Investing.com -- KeyBanc Capital Markets downgraded Nike to Sector Weight from Overweight, flagging a slower-than-expected turnaround, mounting headwinds in China and Europe, and a management transition that further clouds the near-term outlook.

Analyst Ashley Owens, who had upgraded the stock in September, said the core pillars of that call — growth in North America and a rebuilding of the wholesale channel — remain partially intact, but that progress on rightsizing the sportswear business and addressing weakness in Greater China has been slower than anticipated.

Also, a reversal in trends in EMEA added to the concerns. "Turnaround efforts are taking longer to materialize than expected, with the outlook further clouded by China/EMEA uncertainty, ongoing marketplace headwinds, and another management transition," Owens said.

KeyBanc trimmed its full-year 2027 (FY27) revenue estimate to $46.17 billion from $46.46 billion, reflecting steeper declines in Greater China, now seen down 12% year-over-year versus a prior estimate of -9.3%, and softer growth in EMEA. EPS was cut to $1.74 from $1.79, leaving both estimates roughly 1-4% below consensus.

The analyst also flagged a longer-term competitive concern. While Nike’s brand health remains solid in surveys, consumers are increasingly shopping across multiple brands rather than buying Nike exclusively.

“We believe that consumers are not as brand-agnostic as they once were, with share continuing to shift towards "disruptor" brands, and is likely aiding in a longer pathway toward recovery/elongated marketplace cleanup actions,” Owens wrote.

The World Cup, once seen as a potential catalyst, has also failed to deliver the differentiation Nike needed. Owens pointed to the industry-wide adoption of pink boots across brands — Nike, Adidas, Puma, New Balance, and Skechers among them — as blurring the brand distinction Nike was seeking, limiting the upside from boot sales at the tournament.

Nike this week announced that its CFO Matthew Friend is set to be replaced in August by former Pfizer CFO David Denton. The leadership change could prompt further cleanup actions not currently reflected in estimates, potentially delaying the Investor Day planned for the fall, Owens said.

At roughly 22.7 times forward earnings, the stock trades at around a seven-turn premium to peers, a gap the analyst said “feels unwarranted given muted growth, likely leaving upside constrained from current levels.”