Nike downgraded to Hold as sales slump and recovery delays weigh on outlook

Nike, Inc. has been downgraded to a Hold rating due to ongoing challenges in its turnaround and an extended recovery timeline. The company's sales are at multi-year lows, with Q4 revenues declining 1% year-over-year and guidance indicating further drops in Q1 FY2027. While gross margins are stabilizing and expected to expand in Q1, recent earnings per share growth was largely driven by a one-time tariff recovery. Notably, Nike did not conduct any share buybacks in Q4 despite a 40% stock price decline, raising concerns about management's confidence in the company's intrinsic value and capital allocation strategy.