RBC Capital Markets has adjusted its stance on Nike, moving the stock from Outperform to Sector Perform and reducing its price target to $50 from $70. The bank said the primary rationale for the change is a recovery that is progressing more slowly and in a narrower fashion than it had expected, leaving limited catalysts to push the share price materially higher in the near term.
Analyst Piral Dadhania noted that Nike’s turnaround since Elliott Hill became CEO in October 2024 is advancing, but not at the breadth or pace RBC had anticipated. The broker lowered its earnings-per-share projections for fiscal 2027 and fiscal 2028 by 9% and 13%, respectively, positioning its estimates roughly 2% below consensus for both years.
"Nike turnaround under Elliott Hill is making progress, but slower and narrower than we were anticipating," Dadhania wrote, and added that "the World Cup, ongoing inventory cleanup, and a lack of new growth engines are unlikely to deliver a sustained revenue inflection for the remainder of calendar 2026."
RBC’s note highlighted a sharp divergence in stock performance between Nike and some peers. Nike shares have fallen by about 50% since Hill’s appointment, while adidas has gained roughly 70% over a comparable stretch following its own chief executive transition. The broker also observed that 12-month forward EPS estimates for Nike have been revised down by about 40% since Hill assumed leadership.
On a multi-year view, RBC projects Nike’s three-year revenue growth at around 3%, which is below the sector’s unweighted average of 6% and well under adidas’s 8% projection. The firm pointed to market-share erosion in sports footwear, noting that Nike has lost more than four percentage points of share since 2023. Brands cited as beneficiaries of that share loss include On Running, New Balance, Hoka, and Asics. In women’s apparel, Lululemon, Alo Yoga, and Vuori are now described as holding stronger premium positions.
A notable concern in the bank’s analysis is the widening disconnect between wholesale sell-in and direct-to-consumer (DTC) sell-out, especially in North America. Dadhania characterized full-price DTC recovery as "the key unlock which should improve through FY27E as comparatives ease." The implication is that a return to stronger full-price DTC performance is central to restoring margin and revenue momentum.
RBC also flagged the Dick’s Sporting Goods acquisition of Foot Locker as an added complication for Nike. The combined retailer is estimated to represent about 11% of Nike’s total revenues and roughly 20% of its wholesale business. The bank expects the merged entity to exercise tighter buying discipline and to eliminate approximately 30% of underperforming styles, a move that could weigh on Nike’s wholesale demand.
RBC’s $50 price target is derived from a discounted cash flow model that assumes a weighted average cost of capital of 8.5% and a terminal growth rate of 2.5%. That valuation implies roughly 15% upside from current levels at the time of the note. Dadhania cautioned that if Nike’s valuation were to revert to the sector average multiple, fair value could fall to approximately $34 to $38 per share.
"We are cautious on credibility of any financial targets," Dadhania wrote ahead of a Capital Markets Day Nike has slated for Fall 2026, underscoring the broker’s tempered view until management can provide clearer evidence of a durable recovery.
Contextual takeaway - RBC’s downgrade reflects a combination of slower-than-expected operational recovery, competitive pressure in footwear and apparel, distribution changes driven by a major wholesale customer consolidation, and an exposure to a DTC recovery that remains incomplete.