Bank of America Just Cut Nike to $30. Is NKE Stock a Falling Knife or a Generational Buy?

Key Stats for Nike, Inc.

• 52-Week High: ~$69 USD
• 52-Week Low: ~$32 USD
• Street Target Price: No consensus shown
• Market Cap: $53.4B
• LTM Gross Margin: 43.2%
• LTM EBIT Margin: 9.0%
• Fwd 2-Yr Revenue CAGR: ~1%

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The Most Famous Brand in Sports Is Having Its Worst Year in Decades

Nike (NKE) needs little introduction. The Swoosh is one of the most recognized symbols in consumer culture, and for decades, the company defined what a global athletic brand with real pricing power looks like. What has happened over the past two years is a different story.

Strategic miscalculations, excess inventory, channel missteps, and a weakening consumer environment in China have sent the stock from above $120 in early 2024 to around $36 today, a collapse of roughly 70%.

Bank of America added to the pressure this morning, downgrading Nike to Underperform and cutting its price target to $30 from $47.

Analyst Lorraine Hutchinson said the turnaround is taking longer than expected, that weakness in lifestyle categories is outweighing progress from newer launches, and that BofA now expects negative sales growth through fiscal 2027.

BofA also raised a dividend concern: FY2027 estimates imply a payout ratio around 107%, meaning earnings would not fully cover the dividend.

The revenue chart shows the stagnation plainly. Nike was at $44.5B in FY2021, grew to $51.4B by FY2023, and has since declined to $46.4B in FY2026. Consensus estimates have revenue recovering toward $45.5B next year, barely above where the company was five years ago, climbing only gradually toward $54B by 2030.

Six years of flat-to-declining revenue for one of the most powerful consumer brands in the world is the central problem this article is about.

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Why the Margin Chart Matters More Than the Revenue Chart

CEO Elliott Hill, who came out of retirement to lead the turnaround, has been consistent about sequencing: gross margin recovery comes before revenue recovery. Nike over-discounted inventory, leaned too hard into direct-to-consumer at the expense of wholesale relationships, and gave up the premium positioning that justified its price points.

Rebuilding that means accepting continued top-line pressure while the brand regains full-price discipline.

The gross margin chart is where the thesis gets tested. Margins peaked at 45.98% in FY2022, compressed to 43.52% in FY2023 during the inventory clearance, partially recovered to 44.68% in FY2024, then fell again to 42.73% in FY2025 as the reset deepened. The most recent reading of 43.25% in FY2026 is a modest improvement but still well below the peak.

BofA noted today that Nike’s earnings setup is increasingly dependent on gross margin recovery rather than sales growth, and the chart shows that recovery is real but incomplete.

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What the Valuation Model Says About Buying Here

Nike trades at roughly 17x trailing earnings and around 1.2x revenues, both near multi-year lows. The valuation model’s mid-case puts a target of around $68 over the next 5.7 years, implying roughly an 87% total return at around 14% annualized.

Revenue is assumed to grow around 2% annually, margins recover toward 7.2%, and EPS grows around 2.7% per year. The model is not counting on multiple expansion.

P/E change is essentially flat in the mid case, which makes it more credible than scenarios requiring aggressive re-rating.

Extend to 2035 and the mid case reaches around $81 at roughly 10% annualized. Every dollar of that return depends on the turnaround working, and BofA’s downgrade today is a direct challenge to that timeline.

Should You Buy Nike Stock?

The bull case is brand and price. Nike at $36 and 1.2x revenues is historically cheap for a business with 43% gross margins, irreplaceable IP, and global distribution that competitors have spent decades trying to replicate.

Elliott Hill’s playbook is sound even if execution has been slow, and patient investors in distressed world-class brands have historically been rewarded.

The bear case is BofA landing closer to right than wrong. If the turnaround slips to 2028, dividend coverage breaks down, and China stays a headwind, the stock has a credible path to $30 before $68.

Negative revenue growth through fiscal 2027 means investors at $36 are not buying a recovery they can see yet. They are buying a bet that one arrives.

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Disclaimer:

Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!