Truist downgrades Nike as DKS update clouds turnaround progress

Investing.com -- Truist cut its rating for Nike (NYSE: NKE) to Hold from Buy in a note Wednesday and lowered its price target to $42 from $47, saying an update from Dick's Sporting Goods (NYSE: DKS) has muddied the picture on the sportswear group's recovery.

The brokerage said the guidance cut at Dick's, driven largely by deteriorating footwear trends, "signals incremental murkiness around NKE's turnaround progress." It downgraded Dick's to Hold as well, slashing its target to $135 from $270.

Analyst Joseph Civello said Truist had previously been cautiously optimistic on Nike, citing the strength of its running launches and commentary from both companies suggesting visibility into cleaner marketplace inventories was improving.

Nike had highlighted U.S. wholesale as a bright spot and noted on its June 30 earnings call that its Foot Locker business had returned to growth for the first time in four years.

However, Truist now believes much of that optimism reflected Dick's underestimating the scale of cleanup needed and the degradation in brand heat, pointing to two pressures management flagged, with legacy silhouettes no longer resonating as they once did, and second-quarter launches underperforming expectations.

"We believe it is best to move to the sidelines until there is more clarity around both the cleanup process and pipeline of newness coming in 2027," Civello wrote, adding that the level of full-price selling that pipeline can generate remains a key question.

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