Citi analyst Paul Lejuez is not entirely convinced that Nike Inc (NYSE: NKE) can deliver a much-anticipated turnaround under the leadership of its new chief executive Elliott Hill – at least in the near term.
Lejuez downgraded Nike stock this morning to “neutral” and lowered his price target on the athletic footwear and apparel retailer to $72 that no longer suggests a meaningful upside.
The Citi analyst turned dovish on NKE following a meeting with CEO Hill that failed to bring him any more confidence in the company’s ability to pull off a timely comeback.
Note that Nike shares have lost about 20% since early October.
Why is Citi dovish on Nike stock?
Citi analyst Paul Lejuez discussed the key initiatives as well as challenges in the face of Nike with its new chief executive Elliott Hill.
“We no longer believe F26 will inflect the way we hoped, either on the sales or EBIT margin line,” he told clients in a research note after the sell-side event.
Lejuez now expects continued pressure on NKE’s top-line as the company manages down key franchises, “without enough new product at scale to fill the void” in its fiscal 2026.
Nike stock, however, may succeed in keeping income investors interested this year with a 2.23% dividend yield at writing.
China tariffs could hurt Nike Inc
Paul Lejuez downgraded Nike stock today also because the new 10% tariffs on China and the potential trade war that could follow may result in the athletic apparel firm losing share this year.
As Nike taps on discounts to unload current products, the demand for its new full-price rollouts could take a hit in 2025, the Citi analyst added.
We believe F26 consensus estimates are too high, making the turnaround timing much less visible, and we no longer have the patience or conviction to wait another year.
All in all, the Citi analyst expects 2026 to be another down margin year for Nike stock.
Nike faces rising competition
Finally, City’s Lejuez expects smaller rivals like Birkenstock, On, and Hoka to make it even more challenging for Nike Inc to orchestrate a successful turnaround.
All three of those brands are already seeing significant momentum are committed to roll out new products that will go up against NKE in some way.
Therefore, Nike could have a “hard time disrupting their momentum, making it difficult to gain back shelf space with wholesale partners.”
Nike Inc is scheduled to report its Q3 earnings next month. Consensus is for it to earn 28 cents a share – down sharply from 98 cents per share a year ago.
Note that Nike stock is currently down about 60% versus its all-time high in late November.
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