Nike Sees Downgrades on Market Share Loss Concerns

Wall Street ratings and recommendations for Nike

In this part of the series, we’ll look at Wall Street’s recommendations for Nike (NKE) and talk about recent rating changes.

Wall Street has a positive-to-neutral view on Nike and has rated its stock a 2.2 on a scale where one is a strong buy and five is a strong sell. In comparison, Lululemon Athletica (LULU), Columbia Sportswear (COLM), and Under Armour (UA) have received ratings of 2.6, 2.1, and 2, respectively.

Nike Sees Downgrades on Market Share Loss Concerns

Nike is covered by 33 Wall Street analysts. 62% of analysts recommend buying the stock, while 35% recommend holding the stock. Only 3% of analysts have recommended a “sell” on the company.

Recent rating revisions

Nike has recently faced downgrades from several brokerage houses, primarily due to the increasing competition from Under Armour (UA) and Adidas (ADDYY).

Bank of America Merrill Lynch downgraded Nike on October 31, 2016, to “underperform” from “neutral,” citing rising competition and a lack of innovation. Analyst Robert Ohmes commented, “We now expect Nike’s market share loss to Adidas and Under Armour to continue through 2017 as our meetings with manufacturers/suppliers and competitors indicated a potential narrowing of the innovation gap for Nike’s pipeline relative to the competition compared to historical levels, in our view.”

Cowen & Co. downgraded Nike on December 6, 2016, to “market perform” from “outperform,” citing rising competition from Adidas and Under Armour, higher inventory levels, and increased promotional sales. Analyst John Kernan commented, “NKE’s share loss to Under Armour and Adidas could accelerate, while promotions in N. America and international inventory appear elevated.”

ETF investors seeking to add exposure to NKE can consider the SPDR Consumer Discretionary Select Sector ETF (XLY), which invests 2.9% of its portfolio in NKE.