JPMorgan maintains Underweight rating on Nike (NKE.US): Deep in adjustment pains, performance pressures may persist until fiscal year 2028

According to Jinzhong Finance APP, JPMorgan has recently released a US equity research report on Nike (NKE.US). The research team participated in a face-to-face meeting with Nike’s new CFO, Danton, and, based on management statements, updated their earnings assumptions. They maintain an “Underweight” investment rating on Nike, with a target price of $33 for December 2027. The report warns that, due to the impact of the Jordan brand and the restructuring of the Greater China strategy, the company’s earnings pain cycle may extend into the 2028 fiscal year.

The newly appointed CFO, Danton, has thirty years of corporate financial management experience, having previously served at Pfizer, Lowe’s, and CVS Health. His career history shows that when corporate growth stalls, the primary task is to repair internal operations before driving the business flywheel. This approach has also become the core logic behind Nike’s current reform.

In terms of short-term performance, Nike will face a double headwind in revenue for the second fiscal quarter. In addition to a high base from major promotions in the EMEA region and the impact of high wholesale channel shipments in North America last year—together causing about a 400 basis point drag on revenue—the voluntary strategic adjustments of the Jordan brand and in the Greater China region will form new negative impacts. JPMorgan estimates that the company’s Q2 reported revenue will decrease by 13.2% year-on-year, lower than the market consensus of -10.7%. Adjusted EPS is expected to be only $0.30, significantly below the market’s $0.37 expectation. Excluding the one-off boost from the World Cup, Nike’s Q1 revenue in constant currency actually fell 6%-7% year-on-year, indicating a fundamentally weak situation.

Management has confirmed that Nike is actively reducing the launch scale of Jordan retro shoes, with order declines at some partner retailers reaching up to 50%. The restructuring of the online channel in Greater China has basically been completed, but much work remains to be done for offline store optimization. The financial impacts of these reforms will not stop in fiscal 2027 and will continue to spill over into fiscal 2028. Due to inventory overhang, the “Pace Project” aimed at cost reduction and efficiency improvements is unlikely to deliver significant gains in the short term, as the cost savings will be offset by inventory pressure, causing the pace of gross margin recovery to lag behind market expectations. JPMorgan projects that in fiscal 2028, Nike’s revenue will still decline by 2.8% year-on-year, and EPS will be $1.13, far below the market’s generally optimistic expectations.

Although the long-term outlook for the global sportswear industry remains positive, with institutional forecasts predicting an annual growth rate of up to 4.8% by 2030 and the North American running business showing some positive signs, the report points out that at this stage, Nike is not a growth company. International markets such as Europe and Greater China still require deep restructuring, global end-user sales face pressure, and the timing for revenue inflection and the return to double-digit operating margins has been significantly extended.

Nike will hold an Investor Day in November, with the market focused on two main points: first, clear guidance from management regarding the duration of strategic adjustments and the financial impact for fiscal 2028; and second, the complete pathway for recovering from the current 5.3% operating margin to around 10% double-digit margin by FY31.

In terms of risks, the report highlights that a stronger-than-expected recovery in US consumer spending, a weaker US dollar, and improved tariff policies could catalyze stock price gains; however, the company’s current share price is mainly driven by internal factors, and downside risks remain significant. As of October 21, 2026, Nike’s stock price was $37.53, with its year-to-date performance significantly lagging behind the S&P 500 index.