BofA analysts say they now expect falling sales through May, dashing prior hopes for a 'spring inflection'

Nike's stock is down around 44% so far this year. The company reports quarterly results next week.

Sneaker giant Nike is currently the S&P 500 Index's 13th-worst-performing stock so far this year, and BofA analysts expect further pressure in the months ahead.

Analysts at the firm, led by Lorraine Hutchinson, downgraded Nike's stock (NKE) to underperform from neutral on Friday, citing continued consumer caution and ongoing struggles in the company's classic casual sneakers business. New products aren't resonating, they said, and competition in China has gotten more difficult.

The analysts also cut their price target to $30 from $47, with the new target implying room to fall 16% from current levels. And they said they expect falling sales through Nike's fiscal 2027, which runs through May, compared with prior hopes for a "spring inflection."

Shares of Nike were down fractionally on Friday. The stock, which is trading at around $36, is currently down around 44% year to date and hovering near 13-year lows.

The analysts became the latest to grow more cautious on Nike, reflective of persistent concerns about the progress of the company's turnaround plans under CEO Elliott Hill. Most of the analysts who cover Nike have a hold or sell rating on the stock, according to FactSet.

Hill has tried to make Nike a more athlete-focused company, after a drop in demand for streetwear and casual sneakers like Dunks and Air Force 1s. This summer, Nike said it expects sales to dip through most of this year, but it said margins - a measure of profitability - would likely be a bit stronger, as the company takes a stricter approach to managing merchandise. Nike, and some retailers, have also cited the popularity of running sneakers like the Vomero and the Pegasus.

But the efforts haven't convinced Wall Street. The BofA analysts cut their fiscal 2027 and fiscal 2028 earnings-per-share estimates for Nike by 11% and 12%, respectively.

Nike has tried to churn out new sneakers and other gear more quickly to re-engage consumers. But the analysts said retailers would likely need greater proof that those products could actually sell before stocking the items on their shelves.

Nike executives have also said that the company has underinvested in stores in China, relied too heavily on discounting there, and done too little to connect with consumers locally. The BofA analysts said that sports demand in that nation was still weak.

The analysts made their assessment as Nike prepares to report quarterly results next week, and as David Denton, its new chief financial officer, settles into the job. As he does, cost cutting is likely to become a bigger focus for Wall Street, the analysts said.

"With sales under pressure, the earnings outlook increasingly depends on [gross-margin] expansion and cost control, creating downside risk if progress falls short," they said.

-Bill Peters