Nike observes a decline in the enthusiasm of analysts to the lowest point in 25 years.

Wall Street’s excitement about Nike hit a record low in over 25 years, following Bank of America’s recent shift to a more negative outlook on the troubled sportswear company.

Analyst Lorraine Hutchinson downgraded the sportswear manufacturer’s stock rating from “neutral” to “below market performance” (underperform), pushing back the projected sales recovery to 2028. Profit estimates for 2027 and 2028 were also significantly lowered, highlighting increased risk for both financial results and company valuation.

Hutchinson noted in a report published on Friday that there is minimal risk associated with profit estimates due to Nike’s ongoing focus on innovation being overshadowed by its traditional product business, along with challenges in specific segments and macroeconomic conditions.

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Nike’s current average analyst recommendation of 3.3 on a scale of 1 to 5 marks its lowest level since 2001, based on data from Bloomberg.

Nike’s shares decreased by 0.4% at 2:00 pm in New York, marking three consecutive sessions of losses. Hutchinson’s new target price of US$30 suggests a 17% decline from Thursday’s closing price. The stock has not shown a positive yearly performance since 2021 and is experiencing its worst annual performance since 1993, coinciding with Michael Jordan’s initial retirement from professional basketball.

Hutchinson from Bank of America mentioned that they are heightening the risks associated with the company’s recovery initiatives. The analyst forecasts a deceleration in wholesale sales in North America, attributing it to consumer sales lagging behind retailer sales due to the absence of traditional models and consumer apathy towards new releases.

In China, Hutchinson believes that the company’s operations are experiencing increased demand, possibly because partner online sales are decreasing. In Europe, the company is dealing with economic and competitive challenges.

Profit prospects are now more reliant on increasing the gross margin and managing costs due to declining sales, posing a risk of decrease if progress falls short of expectations, according to the analyst.

Nike, once dominant on Wall Street, experienced a shift in its status due to declining sales of Jordan brand items and challenges in its athletic division against competitors like Deckers Outdoor, maker of Hoka running shoes.

The company is currently going through a significant strategic overhaul named “Win Now,” overseen by CEO Elliott Hill. However, the journey has been turbulent, with Nike’s value plummeting by over 50% following Hill’s return announcement two years ago, resulting in a market value loss of about $77 billion. The gradual progress of the Win Now strategy has also caused dissatisfaction.

Nike is encountering a range of issues regarding its brand reputation, such as national teams in the FIFA World Cup finals wearing Adidas instead of Nike, losing Kylian Mbappé to On Holding, and facing backlash over a Converse ad linked to Ku Klux Klan imagery.

Nike hopes that the new financial director, David Denton, who joined from Pfizer in August, will aid in the company’s recovery. However, Hutchinson warns that Denton is stepping into a situation where there is little room for mistakes in operations.

The appointment of a new financial director is expected to prioritize reducing costs, with a focus on analyzing and potentially reducing operating expenses.