Truist Downgrades Nike to Sell Amid Ongoing Risks and Mixed Turnaround Outlook

Truist analyst Joseph Civello downgraded NKE to Sell from Hold on November 5, keeping his $29 price target, which implies 28.4% downside from the stock's $40.49 close on November 4. The call arrives after Nike shares rose 19% over the past month, a rally Truist attributes largely to sector rotation rather than improving fundamentals.

Truist flagged several issues behind the downgrade: retro Jordan launches sitting on shelves, limited visibility on when the China business will bottom, and difficult comparisons ahead. It also argued the valuation is stretched at 27 times two-year-forward earnings, nearly double peers. Morgan Stanley took a similar stance a day earlier, cutting its target to $25 with an Underweight rating.

The fundamental backdrop explains the skepticism. In its fiscal first quarter of 2027, ended August 31, Nike's sales in China fell 25% year over year, and the company still expects sales to decline this year, according to a Motley Fool analysis. New chief financial officer Dave Denton is overseeing a turnaround that is showing progress, but the shares remain 77% below their all-time high.

What to watch: Nike's next quarterly report for evidence that China is stabilizing and retro Jordan inventory is clearing, and whether other analysts follow Truist and Morgan Stanley with more cautious calls.