Nike stock retreated on a downgrade Wednesday as Wells Fargo revised targets for a number of retailers.
Wells Fargo on Wednesday reportedly slashed earnings estimates across the U.S. apparel sector as the firm anticipates a difficult second half of the year amid tariff pressures and macroeconomic uncertainty.
The analysts cut their 2026 EPS forecasts by 20% to 25% below Wall Street consensus estimates and downgraded several stocks.
The updated targets incorporate current tariff headwinds and assumptions for a "mild" recession, both of which are expected to start affecting results in the second half of the year. Wells also noted the cumulative 145% tariff on Chinese imports and weak consumer sentiment.
Nike and Gap both received downgrades to equal weight from overweight.
For Nike, the Dow Jones retailer's turnaround is "simply taking longer than hoped," the analysts wrote. Meanwhile, current macro worries "will likely kick the can even further out," according to the note.
The firm cut its price target on Nike stock to 55 from 75.
Wells Fargo lowered its price target on GAP stock by 6 to 24, noting that opportunities to expand margins and leverage costs will be limited.
Victoria's Secret was downgraded to underweight, as nonessential undergarments are more recession-sensitive. The brand has also struggled to sustain pricing in the past, which will be critical in the near-term. Wells Fargo cut its price target on VSCO stock to 12 from 25.
Levi Strauss was upgraded to overweight from equal weight. Wells Fargo noted that Levi Strauss has very little exposure to China and has the ability to maintain pricing power due to brand strength. The firm lifted its price target on the shares to 20 from 17.
Nike, Other Stocks React
Nike stock retreated 2% on Wednesday. NKE stock was the second-worst performer on the Dow in early trade, only outpaced by Chevron.
Nike stock has tumbled almost 26% so far this year.
Gap shares fell 2.3% Wednesday, but reversed for a slight gain. GAP stock is down about 7% in 2025, but is still trading above its 50-day line.
Victoria's Secret stock rose a fraction, after initially sliding more than 2% Wednesday. Shares are down about 55% this year.
LEVI stock climbed 1.5%. Shares are facing resistance at their 50-day line. Levi Strauss is down 7.5% so far this year.
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