There is a downside to the current consensus estimates for Nike Inc (NYSE:NKE) for fiscal 2027 earnings, according to JPMorgan.
• Nike stock is showing downward bias. What’s the outlook for NKE shares?
The Nike Analyst: Analyst Matthew Boss reiterated an Underweight rating on the stock.
The Nike Thesis: The company is likely to generate earnings of $1.55 per share in fiscal 2027 versus consensus of $1.72 per share, with revenues expected to decline sequentially in the second quarter and back half of the year, Boss said in the note.
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He noted the following takeaways from recent channel checks:
- Greater China Headwinds: Partners Pou Sheng and Topsports initiated early inventory clearance in July, ahead of the termination of online sales distribution on Jan. 1, 2027. This cutoff represents an annualized revenue headwind of more than $1 billion.
- North America & EMEA (Europe, the Middle East, and Africa) Promotions: Elevated inventory in legacy lifestyle silhouettes and apparel is fueling aggressive discounting through the Holiday quarter. Weak consumer sentiment and delayed Back-to-School demand hurt retail partners.
The analyst further stated that there are two key themes to monitor:
- Rising Competition: Market share is fragmenting as "ankle biter" brands have grown to around 17% market share combined, eroding Nike’s market lead. Consumers increasingly favor specialized performance brands over single mega-brands.
"To us, the central question is no longer whether niche brands can grow, but whether consumer behavior has structurally shifted toward lower brand loyalty and higher multi-brand trial, making share recapture a harder, more durable challenge," Boss wrote.
- Market Maturation: Global sportswear growth is slowing from +6.2% pre-pandemic to an expected +4.5% in fiscal 25-28. Wallet penetration has reached around 24%, tightening further category growth.
The analyst expects Nike’s revenue to contract 5.9% year-on-year in the second quarter versus Street expectations of a 4.4% decline, and by 4.6% year-on-year in the second half of fiscal 2027, nearly 500 basis points below consensus of flat growth.
NKE Price Action: Shares of Nike declined by 0.88% to $39.25 at the time of publication on Monday.
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