Nike Slides After Piper Sandler Downgrade on Turnaround Concerns
Nike shares fell 3% on Friday after Piper Sandler issued what CNBC's Jim Cramer called a "very damning" downgrade, raising fresh questions about the sportswear giant's turnaround strategy under CEO Elliott Hill.
The stock, now trading in the low $40s, was downgraded to a hold-equivalent rating from buy, with Piper Sandler cutting its price target to $50 from $60. Analysts cited concerns about Hill's leadership appointments, many of whom have worked at Nike for decades.
Leadership Questions Cloud Turnaround
"We worry if the correct execution of the turnaround requires more outside perspective as opposed to NKE veterans," Piper analysts wrote in their research note. The firm also expressed concerns that the athleisure market has become "too saturated" and that Nike remains "still overly dependent" on classic brands including Air Force 1, Air Jordan, and Dunk.
Hill, who will mark his second anniversary as CEO in October, launched a turnaround strategy called "Win Now" focused on restoring Nike's brand status through sport innovation, repairing retail partnerships, and restructuring leadership.
Financial Performance Disappoints
The downgrade follows Nike's March 31 earnings report, which showed flat revenue for fiscal 2026's third quarter and earnings per share down 35% year over year. The company also issued disappointing guidance for fiscal Q4.
Analysts now project Nike won't return to annual sales growth until the February 2027 quarter. The stock tumbled 15% on April 1 following the earnings announcement and has risen in only two sessions since.
Wall Street Temper Expectations
Several major firms, including JPMorgan, downgraded Nike after the earnings report. Cramer's investing club also lowered its rating to a hold-equivalent 2, acknowledging the lack of a clear catalyst for recovery.
"I've been trying to figure out whether it is a mistake or whether we can give [Hill] till October," Cramer said on CNBC's Morning Meeting. "It's a very hard business."
Despite the challenges, Cramer indicated he's inclined to maintain his position for now, though he noted the absence of a near-term catalyst to justify adding shares.
