A fresh face in Nike’s leadership hasn’t quite swayed Citi’s confidence in the company staging a successful revival. Analyst Paul Lejuez recently downgraded the stock of the athletic giant from a ‘buy’ to a ‘neutral’ stance, while also trimming his price target from $102 down to $72. This target is just a bit higher than where Nike’s stock concluded on Thursday, at $71.74. Over the past year, Nike’s shares have seen a significant drop of 31%.
Citi’s move came in the wake of a sell-side gathering arranged to introduce Nike’s new CEO, Elliott Hill, who many view as a vital part of the brand’s potential resurgence. However, Lejuez walked away from their meeting feeling less than confident. He shared, “After assessing the crucial factors and hurdles for achieving a turnaround, we no longer foresee fiscal 2026 performing as we had hoped, neither in sales nor in earnings before interest and taxes (EBIT) margin. Ongoing pressures on topline growth are anticipated as they continue to scale down key franchises in F26, without sufficient new products at scale to bridge the gap.”
Lejuez expressed concerns, believing current fiscal 2026 consensus estimates are overly optimistic, making the timetable for turning things around much murkier. “Our conviction is waning, and we’re not inclined to wait another year,” he added. Beyond sales struggles, Lejuez pointed out potential margin challenges arising from pulling products from the market and launching new ones. Despite being a short-term issue, these challenges are expected to linger past fiscal year 2025, potentially leading to yet another year of declining margins in 2026.
Moreover, a possible trade war between the U.S. and China poses a risk of losing market share among Chinese consumers. Nike’s strategy to sell off current inventory through discounted channels could also undermine the demand for upcoming full-price releases. Lejuez didn’t overlook the competition either, identifying smaller players such as Hoka, On, and Birkenstock as rising threats. “Brands like Hoka, On, and Birkenstock are gaining significant momentum. They’re steadily venturing into products that will rival Nike in certain areas, potentially making Nike’s efforts to reclaim shelf space with wholesale partners a tough battle,” he remarked.
