Truist Securities downgraded Nike (NKE) from Hold to Sell on Thursday, saying a recent stock rally reflected sector rotation rather than stronger fundamentals. The stock had risen 19%. The firm maintained its $29 price target.
Truist said Nike’s valuation had become stretched, with its price-to-earnings multiple approaching twice the peer average. It cited retro Jordan products lingering on shelves, limited visibility into a recovery in China sales, and difficult comparisons with the previous year.
The firm also said the outlook for Nike’s running category, a recent area of success, was becoming more challenging.