Wells Fargo downgrades Nike over recession fears and tariff risks

On April 30, 2025, Wells Fargo announced a downgrade of Nike's stock rating from overweight to equal weight, indicating a cautious stance toward the athletic apparel manufacturer. Analyst Ik Boruchow cited situations like new tariff headwinds and a potentially looming mild recession as significant risks impacting Nike's earnings. These developments have already led to a notable decline in Nike's share price, which has dropped 24% since the start of 2025. Boruchow's updated price target for Nike's stock is now $55, down from $75, suggesting a further potential decline of 4% from its closing price on the previous day. Boruchow expressed concerns that the company is facing a challenging environment that complicates efforts by CEO John Donahoe to execute a turnaround strategy. The news has led to a 1% decrease in shares during premarket trading on Wednesday. The downgrade reflects the assessment that while Nike might have strong long-term potential, the current macroeconomic conditions do not favor a significant recovery in the near term. In his analysis, Boruchow also outlined a bull case and a bear case for investors: he anticipates that shares could rise to $70, providing a 22% upside, but he also warns of a worst-case scenario where shares could plummet to $30, marking a potential downside of 48%. These projections highlight the volatility and uncertainties surrounding the company's financial outlook. The analyst indicated that these risks make Nike one of the most concerning stocks at the moment, reiterating that today's macroeconomic worries could further delay any turnaround plans the management has set in motion. The ongoing developments will require careful monitoring by investors as Nike navigates through these challenges, signaling to the market that a cautious approach may be prudent while waiting for more favorable conditions to emerge.