Investing.com -- RBC Capital Markets cut its Nike stock rating to Sector Perform from Outperform and slashed its price target to $50 from $70, citing a slower-than-expected turnaround and few catalysts to drive the stock higher in the near term.

Shares in the sportswear giant fell 1.2% in premarket trading by 04:34 ET.

Analyst Piral Dadhania said Nike’s recovery under CEO Elliott Hill, who took over in October 2024, is making progress but remains narrower and slower than anticipated. The bank reduced its fiscal 2027 (FY27) and FY28 EPS estimates by 9% and 13%, respectively, placing RBC roughly 2% below consensus on both years.

"Nike turnaround under Elliott Hill is making progress, but slower and narrower than we were anticipating," Dadhania wrote, adding that the World Cup, ongoing inventory cleanup, and a lack of new growth engines are unlikely to deliver a sustained revenue inflection for the remainder of calendar 2026.

Nike shares have fallen roughly 50% since Hill’s appointment, while its peer Adidas gained around 70% over a comparable period following its own CEO transition. Nike’s 12-month forward EPS estimates have been revised down roughly 40% since Hill took the helm, RBC noted.

The broker sees Nike’s three-year revenue growth outlook at around 3%, below the sector’s unweighted average of 6% and well behind adidas at 8%. Nike has lost over 4 percentage points of sports footwear market share since 2023, with On Running, New Balance, Hoka, and Asics among the beneficiaries.

In women’s apparel, Lululemon, Alo Yoga, and Vuori now hold stronger premium positioning.

A key concern for RBC is the widening gap between wholesale sell-in and DTC sell-out, particularly in North America. Dadhania views full-price DTC recovery as "the key unlock which should improve through FY27E as comparatives ease."

The Dick’s Sporting Goods acquisition of Foot Locker adds further complexity. The combined entity represents an estimated 11% of Nike’s total revenues and 20% of its wholesale business, and RBC expects it to adopt tighter buying discipline and cut around 30% of underperforming styles.

RBC’s $50 DCF-derived price target is based on a weighted average cost of capital (WACC) of 8.5% and a 2.5% terminal growth rate, implying roughly 15% upside from current levels. Dadhania cautioned, however, that if Nike’s valuation were to normalize to the sector average multiple, fair value would fall to around $34–$38 per share.

"We are cautious on credibility of any financial targets," Dadhania wrote ahead of a Capital Markets Day Nike has flagged for Fall 2026.