JPMorgan has maintained its Underweight rating on Nike (NKE) with a December 2027 price target of $33, following a face-to-face meeting with new CFO Denton, according to a US equity research report.
The report warns that Nike's earnings pain from Jordan Brand and Greater China strategic restructuring could stretch into fiscal 2028, with the new CFO's thirty years of experience at Pfizer, Lowe's and CVS Health shaping a turnaround philosophy that prioritizes fixing internal operations before driving growth.
For the second fiscal quarter, Nike faces multiple revenue headwinds including the EMEA region's high promotional base and North American wholesale channel inventory build from last year, dragging revenue by roughly 400 basis points.
JPMorgan estimates Q2 revenue will decline 13.2% year-over-year on a reported basis, below the consensus of -10.7%, with adjusted EPS of just $0.30 versus expectations of $0.37.
Excluding one-time World Cup benefits, first quarter constant-currency organic revenue actually fell 6%-7%, confirming weak underlying fundamentals.
Management confirmed Nike is actively scaling back Jordan retro shoe releases, with some partner retailers seeing order cuts of up to 50%.
Greater China online channel remediation is largely complete, but offline store optimization still requires substantial work, and the financial impact from these reforms will extend beyond fiscal 2027 into fiscal 2028.
Inventory buildup is disrupting the cost-saving "Pace program," with cost savings offset by inventory pressure and gross margin recovery progressing slower than market expectations.
JPMorgan forecasts fiscal 2028 revenue will still decline 2.8% year-over-year with EPS of $1.13, significantly below optimistic consensus estimates.
While the global sportswear sector remains attractive long-term with projected 4.8% annual growth through 2030 and some positive signals in North American running, the report notes Nike is not currently a growth company.
International markets including Europe and Greater China still need deep resets, global sell-through remains under pressure, and the timeline for revenue inflection and return to double-digit operating margins has been significantly extended.
Nike will host an investor day in November, with markets focused on management's clear guidance on the strategic adjustment cycle and fiscal 2028 financial impact, plus the path from current 5.3% operating margin to approximately 10% by fiscal 2031.
On risks, the report notes upside catalysts include stronger-than-expected US consumer recovery, a weaker dollar and improved tariff policies, though downside risks remain significant as the stock is currently driven by company-specific factors.
As of October 21, 2026, Nike shares traded at $37.53, significantly underperforming the S&P 500 year-to-date.
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