Citi analyst Paul Lejuez says that he is not convinced that Nike Inc. (NYSE: NKE), under the leadership of its newly appointed chief executive Elliott Hill, can deliver the much-anticipated turn-around – at least for the near future.
Lejuez downgraded Nike’s stock this morning from “buy” to “neutral”. He also lowered his target price for the athletic footwear and clothing retailer to $72, which no longer indicates a significant upside.
Citi analyst became dovish after a meeting with CEO Hill, which did not inspire him with any more confidence in NKE’s ability to make a timely recovery.
Nike shares have fallen by about 20% since the beginning of October.
Why is Citi dovish about Nike stock?
Citi analyst Paul Lejuez discusses the key initiatives and challenges facing Nike with its new CEO Elliott Hill.
In a research note he sent to clients after the sell-side conference, he said: “We no longer think F26 will inflect in the way we hoped.
Lejuez expects NKE to continue to face pressure on its top-line in fiscal 2026 as it manages down key franchises “without enough new products at scale” to fill the void.
Nike stock may be able to keep income investors interested in this year, with a dividend yield of 2.23% at the time of writing.
Nike Inc. could be hurt by China tariffs
Paul Lejuez also downgraded Nike’s stock today because the new tariffs of 10% on China and a potential trade war could result in the athletic clothing firm losing market share this year.
Citi analyst said that as Nike uses discounts to move current products, demand for new full-priced launches could be affected in 2025.
We no longer have the patience to wait another year.
Citi analyst predicts that Nike stock will continue to experience a decline in 2026.
Nike faces rising competition
Lejuez believes that smaller rivals such as Birkenstock, On and Hoka will make it even harder for Nike Inc. to achieve a successful turnaround.
All three brands have already seen significant growth and are committed to launching new products that will compete with NKE in some manner.
Nike may find it difficult to disrupt their momentum and regain shelf space from wholesale partners.
Nike Inc. is scheduled to release its Q3 earnings on the 15th of next month. The consensus is that it will earn 28 cents per share, down from 98 cents a year ago.
Note that Nike’s stock is currently down 60% from its all-time peak in late November.
This post Nike’s management under fire? Citi unimpressed by CEO meeting may be changed as updates unfold
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