Truist revised its stance on Nike (NYSE: NKE) on Wednesday, taking the stock from Buy to Hold and trimming the price target to $42 from $47. The brokerage said a guidance reduction at Dick's Sporting Goods (NYSE: DKS) has introduced new uncertainty around the pace of Nike's turnaround.
The firm applied the same downgrade to Dick's, moving it to Hold and lowering its price objective sharply to $135 from $270. Truist attributed the guidance cut primarily to worsening footwear trends at the chain.
Why Truist changed course
Analyst Joseph Civello said Truist had been cautiously optimistic about Nike based on the company's running product launches and earlier comments from both Nike and its wholesale partners that suggested inventory levels in the marketplace were becoming cleaner. Nike had pointed to U.S. wholesale as a relative bright spot and noted on its June 30 earnings call that its Foot Locker wholesale business had returned to growth for the first time in four years.
Despite those signals, Truist now believes some of the prior optimism may have stemmed from Dick's underestimating the scale of the inventory cleanup required and a weakening in brand momentum. The note highlights two specific pressures identified by management: legacy silhouettes are not resonating as they once did, and second-quarter product launches have underperformed expectations.
Civello wrote that it is prudent to step to the sidelines until there is clearer evidence about both the cleanup process and the pipeline of new product coming in 2027. He added that the level of full-price selling that the upcoming product pipeline can support remains an open question.
Market moves noted in the report
- The write-up included short-term market moves: NKE -2.37% and DKS +3.54% as cited in the report.
Bottom line
Truist's dual downgrades reflect growing caution about footwear trends and the timing and effectiveness of inventory cleanups and new-product momentum. The brokerage will look for clearer signals on both inventory normalization and the strength of future launches before revisiting its recommendations.