Nike (NYSE:NKE) stock is down over 1% premarket Monday after JPMorgan placed the company on "Negative Catalyst Watch" ahead of its first-quarter earnings report for fiscal year 2025.
The stance stems from projected declines in revenue, with JPMorgan analysts lowering their earnings per share (EPS) forecast for Nike's Q1 to $0.48, below the Street consensus of $0.52.
The bank explains that the reduction is driven by a 10% decline in gross profit dollars, worse than the expected 9.3% drop.
JPMorgan's analysis points to headwinds across all major geographic regions as key factors in Nike's struggles.
The bank notes that in China, consumer caution and digital promotions are taking a toll on demand, while local brands continue to gain market share through competitive pricing.
In the Europe, Middle East, and Africa (EMEA) region, Nike is said to be facing softening consumer traffic and heightened competition across both lifestyle and performance categories.
In North America, the company is grappling with challenges in its direct-to-consumer (DTC) factory stores, which are particularly impacted by weaker spending from lower-income consumers, according to JPMorgan.
Nike's full-year outlook is also under pressure. JPMorgan has revised its FY25 EPS estimate down to $2.98, below the consensus of $3.08, due to revenue projections that are 5.9% lower than anticipated.
The firm is also forecasting a slower recovery, pushing the expected financial model inflection to FY27.
JPMorgan is "anticipating a margin recovery playbook in FY26 to precede revenue recapture in FY27."
While JPMorgan is encouraged by the recent appointment of Elliott Hill as CEO, signaling a potential return to Nike's foundational strategies, near-term financial challenges are expected to persist.
Analysts believe Nike's digital sales, wholesale performance, and consumer demand across key regions will be critical to its recovery trajectory.