Nike Exits S&P 100 as BMO Sees Another 20% Downside to $30

Nike just got kicked out of one of Wall Street's most exclusive clubs — and one analyst thinks the stock still has another 20% to fall from here.

BMO Capital's Kelly Crago initiated coverage of Nike (NKE) with an Underperform rating and a $30 price target this month, roughly 20% below where shares were trading. Crago isn't alone in the bearish camp — she also slapped Underperform ratings on Lululemon, Deckers and Dick's Sporting Goods in the same note, arguing the athletic retail category is splitting into clear winners and losers rather than lifting as a whole.

The timing stings. Nike is being booted from the S&P 100 index on September 21, ending an 18-year run in that elite basket of mega-caps, Fortune reported. The company has shed roughly $200 billion in market value since its 2021 peak — a nearly 80% collapse that's left shares trading around $37, down from an all-time high near $179.

Nike will keep its S&P 500 membership. But the index reshuffle is symbolic of a broader shift: Dell Technologies, Palo Alto Networks, Arista Networks and Sandisk are taking the vacated S&P 100 seats, underscoring how far the market's center of gravity has moved from consumer brands toward AI infrastructure and data centers.

Crago's bear case rests on three pressure points: slowing demand for athletic lifestyle products generally, a still-unresolved China reset, and margins that look better on paper than they really are.

Nike's full-year gross margin improved only 20 basis points to 42.9%, even though nearly 900 basis points of its headline fourth-quarter margin gain came from a one-time U.S. tariff recovery.

Strip out that tariff benefit and the underlying profitability story looks a lot shakier than the reported numbers suggest. Diluted EPS of $0.72 in the most recent quarter included $0.52 tied directly to that same tariff windfall — meaning the "real" run-rate earnings power is a fraction of what the headline print implies.

China remains the toughest piece of the turnaround. Nike has now logged eight straight quarters of declining sales there, and fourth-quarter Greater China revenue fell 17% on a constant-currency basis. The company is also pulling online sales rights back from some retail partners as it tries to regain control of its China distribution, while facing sharper competition from domestic brands like Anta and Li Ning.

Nike Direct — the company's push into its own stores and website — also isn't working the way management hoped. Direct revenue fell 6% for the full year, with Brand Digital sales down 12%. Converse, Nike's other major brand, saw full-year revenue collapse 31%.

There's a real counterargument here, and it's not nothing: Wall Street's average price target on Nike still sits around $54, implying over 30% upside from current levels, with nine buy ratings and only three sells among 25 analysts tracked. CEO Elliott Hill has been rebuilding wholesale relationships that the old direct-to-consumer strategy damaged, and fourth-quarter wholesale revenue did grow 4% to $6.6 billion.

Inventory discipline has also improved. Nike ended fiscal 2026 with $7.5 billion in inventory, essentially flat year-over-year, after a multi-year effort to clear out excess lifestyle product. That's a prerequisite for restoring full-price selling, even if it doesn't guarantee demand shows up.

The next real catalyst lands October 1, when Nike reports fiscal first-quarter results. BMO expects management to reset fiscal 2027 guidance lower at that point — if that happens, the $30 target stops looking so extreme. If China shows real stabilization instead, the bear case gets a lot harder to defend.

For investors already holding NKE, October 1 is the date to circle — not before. For anyone thinking about buying the dip, the split between BMO's $30 call and the Street's $54 consensus tells you this is a name where reasonable, well-informed analysts disagree by more than 40% on fair value. That's not a stock to size heavily in either direction right now.

Nike still owns one of the most recognizable brands on the planet. The question the market is now asking isn't whether the brand survives — it's how many more years of resets happen before earnings power actually shows up again.