Near the end of Nike’s earnings call on Oct. 1, CEO Elliott Hill told a football story.
He described how the University of Texas came back from a 20-point deficit against the nation’s top team.
What stuck with him wasn’t the final score. It was the “methodical drives” and “calculated risks” that got the team there.
The message to investors was clear. Nike (NKE) is behind, and the comeback will take time.
Wall Street heard the message, but didn’t like what the scoreboard showed in fiscal Q1.
Nike stock hits a wall
Nike has spent the past few years trying to get back to its roots. In certain business segments, that plan is working.
Its performance business covers running, football, basketball, and training gear. The segment reported revenue of $16 billion in fiscal 2026 (ended in May). It grew in the high single digits again in fiscal Q1, while the running business grew by double digits.
Notably, excitement surrounding the FIFA World Cup powered strong gains.
Also Read: Nike making its most famous sneakers harder to buy
However, Nike Sportswear, which accounts for just under half of quarterly sales, fell by double digits. The Jordan brand, which generates 13% of revenue, fell by the mid-teens, and sales from Greater China were down 26%.
Nike cut revenue from its once-red-hot Dunk sneaker by nearly 50%, a hit of roughly $200 million.
“Yes, the consumer is cautious. But as the leader in the industry, it’s on us to bring more creativity to sportswear,” Hill explained.
He was even more direct about Jordan.
“Simply put, we’ve been oversupplying our iconic retro product, asking them to do too much,” Hill said. “When consumers see the Jumpman, it should feel special. It should feel earned.”
Total revenue in fiscal Q1 came in at $11.2 billion, down 4% from a year earlier. Earnings per share slipped 2% to $0.48.
Comparatively, Wall Street forecast revenue $11.32 billion with earnings per share of $0.43 in Q1.
Goldman Sachs cuts Nike stock price target
The bigger shock for Wall Street was the outlook.
Goldman Sachs lowered its Nike price target to $30 from $38 and kept a “Neutral” rating, Investing.com reported. The firm pointed to fiscal 2027 guidance that landed well below FactSet expectations.
Goldman analyst Brooke Roach pressed management on China during the call, and Chief Financial Officer Dave Denton didn’t sugarcoat his answer.
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“The guidance range that I just provided to you assumes that China actually gets worse from a revenue perspective for the balance of this year,” Denton said.
That’s a tough setup for a stock already on the ropes.
Nike stock currently trades at $33.87, which is close to its 13-year low. Valued at a market cap of $50 billion, NKE stock is down 81% from record highs.
Goldman’s new target sits about 10% below the current price.
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Wall Street splits on Nike stock
Goldman wasn’t alone. Several firms revised their Nike price targets after the report, according to Investing.com:
- Stifel: Cut to $36 from $40, citing bleak revenue projections and a 21% drop in adjusted EPS.
- BTIG: Trimmed to $50 from $55, keeping a Buy rating.
- BofA Securities: Cut to $24 from $30, keeping an Underperform rating due to limited visibility on a sales turnaround.
- Jefferies: Lowered to $60 from $75, keeping a Buy rating while noting progress in Performance and North America.
The spread tells the story. The lowest Nike stock price target is $19 and the highest is $68. Analysts agree that the next year looks rough. They disagree on how long the rough patch lasts.
Out of the 33 analysts covering Nike stock, eight recommend “Buy,” 18 recommend “Hold,” and seven recommend “Sell.” The average Nike stock price target is $38, indicating an upside potential of 12% from current levels.
Why the Nike stock price is under pressure
Nike’s guidance explains the gloom.
Management expects fiscal 2027 revenue to fall by high single digits. EBIT, or earnings before interest and taxes, could decline even faster as lower sales squeeze margins.
Nike’s guidance for adjusted EPS is $1.15 to $1.35. That leaves out about $0.15 tied to Pace, a new program designed to make Nike faster and leaner.
Related: Analyst warns Nike’s best quarter this year may be behind it
Pace is a big bet. Nike expects it to save about $2.5 billion at a cost of roughly $1 billion. But most of those savings won’t arrive until fiscal 2029 and 2030.
The plan includes a new campus in Bengaluru, India, and cutting Nike’s regions from four to three.
Denton, only weeks into the job, described the moment plainly.
“Our results are below both our expectations and our potential, and we are focused on closing this gap,” he said.
What’s next for Nike stock
There are bright spots for the iconic footwear brand, given that sales in North America grew by 2%.
Its gross margins also rose 60% basis points to 42.8%. Moreover, Nike ended the quarter with $8.4 billion in cash and short-term investments.
Income investors got some comfort, too. Nike returned about $610 million to shareholders in the quarter.
The drawdown has meant Nike offers shareholders a tasty dividend yield of 4.7% in October 2026.
Data compiled by TIKR shows that Nike is projected to improve free cash flow from $2.18 billion in fiscal 2026 to $2.77 billion in fiscal 2027 and $3.85 billion in 2031. Comparatively, its annual dividend expense is around $2.4 billion.
Denton claimed that “under all scenarios, we have support for maintaining and ultimately growing the dividend over time.”
The next big test comes in November. That’s when Nike holds its Investor Day and plans to share a financial roadmap for the next five years.
Hill likes to compare Nike’s comeback to a game won with patient, methodical drives. Investors now want to see points on the board.
Until then, Goldman’s $30 target suggests the wait could get more painful.
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