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• Morgan Stanley resumed coverage on Nike with an ‘Underweight’ rating, adding to concerns over the company’s earnings outlook
• Operating pressures remain visible across key markets and channels, including a 17% Q4 FY2026 revenue decline in Greater China.
• Retail sentiment remains ‘bearish’ on Stocktwits.

Nike Inc.(NKE) shares remained under pressure on Thursday, hovering near their 52-week low, after Morgan Stanley resumed coverage of the sportswear giant with an Underweight rating and a price target of $31, warning that Wall Street may still be too optimistic about its earnings recovery. 

The price target implies roughly 20% further downside from current levels, and adds to a growing list of bearish analyst calls as Nike struggles with weak China sales and a turnaround that is taking longer to show results.

NKE stock was down nearly 1% in premarket trading, at the time of writing.

Morgan Stanley Sees More Downside For Nike 

According to Fly, in an investor note, the firm said the market underestimates both the risk of negative earnings revisions and the potential for further valuation compression, modeling fiscal 2028-2030 earnings running about 15% below Street consensus, largely on a more conservative China outlook. 

The analyst added that Nike’s valuation “remains elevated” relative to its weaker growth and earnings outlook amid an “increasingly fragmented” sportswear market.

China Remains A Key Pressure Point

Nike reported a 17% decline in Greater China revenue in the fourth quarter of fiscal 2026, marking another quarter of weakness in the region. The company also said it expected revenue to decline again in the first half of fiscal 2027.

Nike has been changing how it sells products in China as it tries to improve pricing and reduce discounting. Beginning in January 2027, the company plans to limit online sales by wholesale partners and place greater emphasis on Nike-controlled digital channels.

Reuters reported that analysts estimate the China online-marketplace reset could result in a $500 million to $1 billion sales impact.

The company has also faced competition from local brands including Anta and Li Ning, while brands such as On and Hoka have gained share in the athletic footwear market. Nike's China sales have declined for eight consecutive quarters.

Wall Street Is Turning More Cautious

Morgan Stanley's $31 target is below several other recent Wall Street targets, according to reports from The Fly.

JPMorgan in August downgraded Nike to ‘Underweight’ and lowered its price target to $40 from $47. The firm estimated that Nike's fiscal 2027 earnings per share could come in about 10% below consensus and fiscal 2028 EPS about 20% below consensus.

While BMO Capital initiated coverage on Tuesday with an ‘Underperform’ rating and a $30 price target. Analyst Kelly Crago cited slowing lifestyle demand, the China distribution reset and structurally lower margins. BMO expects Nike's earnings recovery to take longer, with fully recovered $3 EPS not arriving until fiscal 2031.

Meanwhile, Bernstein maintains an ‘Outperform’ rating with a $68 target, while Stifel has a ‘Hold’ rating and a $45 target.

S&P 100 Exit Weighs On Sentiment 

Ahead of the S&P 100 removal, Nike's investor-relations team sought to clear up confusion about the company's index status. According to a memo reviewed by Bloomberg, Nike reassured executives that its stock will remain in the S&P 500 despite its removal from the S&P 100. The memo was intended to distinguish the two indexes as Nike prepares to leave the S&P 100 for the first time in nearly 18 years.

Retail Sentiment Remains Bearish

On Stocktwits, retail sentiment around the stock remained ‘bearish’ in the past 24 hours.

Nike closed at $37.35 on Wednesday, down about 41% year-to-date. Shares have fallen roughly 76% from their November 2021 peak of around $179.

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