EXEC: BMO Capital Turns “Negative” on Athletic Stocks
BMO Capital initiated coverage on Nike, Dick's Sporting Goods, Deckers Outdoor, and Lululemon with 'Underperform' ratings, citing shifting trends away from athletic wear. Analyst Kelly Crago expects weakening demand and inventory buildups, favoring stocks like Amer Sports and Steve Madden. Nike was rated 'Underperform' with a $30 price target, while Dick's, Lululemon, and Deckers also received 'Underperform' ratings. Crago predicts a shift in demand from athletic to fashion footwear by 2026.
How this was made
The 30-second read
Why it matters
The downgrades suggest a bearish short-term outlook for the named companies, with possible sector-wide revaluation.
Market read
Analyst coverage changes can move stock prices, especially in a sector showing demand weakness.
What to watch
Potential upside from cost reductions or new product launches not covered in the note.
Background
BMO Capital Markets initiated coverage on several athletic and softlines retailers, assigning new ratings and price targets amid a perceived shift away from athletic footwear.
Ticker impact
BMO initiated coverage on Nike with an Underperform rating and a $30 price target, citing weakening demand.
Short-term price decline expected.
Analyst downgrade with explicit price target suggests lower near-term valuation.
Dick’s Sporting Goods was initiated at Underperform with a $110 target due to heavy Nike exposure.
Possible short-term sell pressure.
Coverage downgrade tied to sector weakness.
Lululemon received an Underperform rating and $70 target as demand weakens in Americas and China.
Likely modest price decline.
Explicit target below current price signals bearish bias.
Deckers Outdoor was initiated at Underperform with a $70 target due to weakening athletic demand affecting Hoka.
Short-term downside expected.
Analyst cites margin compression risk.
On Holding received a Market Perform rating with a $28 target, noting growth opportunities but a tougher demand backdrop.
Limited immediate impact.
Market Perform suggests no strong directional bias.
Academy Sports was initiated at Market Perform with a $42 target, citing challenges from a slowing athletic category.
Small upside or downside, low volatility.
Market Perform rating reflects balanced view.
Market effects
Softlines retail and athletic footwear sector faces headwinds, potentially affecting peers.
U.S. consumer discretionary stocks may see pressure.
Athletic apparel trends could influence global apparel manufacturers.
Counterpoint
Some analysts may see a buying opportunity if the market overreacts to the downgrade.
Key entities
- AnalystKelly Crago
Lead analyst at BMO Capital Markets covering Softlines Retail.
