Wells Fargo downgrades Nike saying turnaround taking longer than expected

Investing.com -- Wells Fargo downgraded Nike (NYSE: NKE) to Equal-weight from its previous Overweight rating saying the turnaround was taking longer than expected time while the sector faces dual pressures of elevated tariffs on Chinese imports and expectations for a mild U.S. recession beginning in the second half of 2025.

Nike’s target was hacked by $20 to $55

Wells Fargo slashed 2026 earnings estimates across the U.S. apparel and footwear sector.

The brokerage cut its 2026 EPS forecasts by 20-25% below Street estimates and downgraded several stocks, including Carter’s Inc and Victoria’s Secret&Co, to “underweight,” citing poor positioning to manage near-term headwinds.

Gap Inc (NYSE: GAP) was also downgraded to “equal weight” from “overweight.”

“We now incorporate, current tariff headwinds and, assumptions for a mild recession into our model, both headwinds to begin impacting numbers in 2H25,” analysts wrote, noting a cumulative 145% tariff on Chinese imports and weak consumer sentiment.

By contrast, Levi Strauss&Co was upgraded to “overweight” as a “winner” in the space, with Wells Fargo highlighting low China exposure and strong brand momentum.

Canada Goose Holdings (NYSE: GOOS) Inc and VF Corp (NYSE: VFC) were both upgraded to “equal weight” from “underweight,” as bear cases appeared “largely played out.”

Wells Fargo added that resale platforms such as The RealReal (NASDAQ: REAL) Inc and ThredUp Inc were the only names in its coverage where it did not lower estimates, citing their counter-cyclical positioning and zero tariff exposure.

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