Nike (NKE) shares surged Monday after JPMorgan upgraded the sportswear giant to "Overweight," citing renewed momentum in its turnaround plan and a clearer path to long-term profitability.
The endorsement from a top-tier Wall Street firm highlights growing confidence in Nike’s multiyear strategy to reclaim its footing after a challenging period marked by excess inventory, sluggish sales, and global economic pressures.
JPMorgan Upgrade Fuels Investor Confidence in Nike’s Comeback
JPMorgan’s analyst team, led by Matthew Boss, lifted its rating on Nike from Neutral to Overweight and boosted its price target to $93, implying nearly 20% upside from Monday’s open. The bank’s note pointed to stronger holiday order books, leaner inventory levels, and a revitalized product pipeline as key signals that the "Win Now" strategy is starting to pay off.
Shares responded immediately, rising over 4% in early trading to hit their highest level in five months. The momentum comes on the heels of a better-than-expected fourth quarter, where revenue topped analyst estimates despite a 12% year-over-year decline. Management's guidance for a sequential improvement gave bulls further reason to cheer.
According to JPMorgan, Nike’s potential earnings recovery could reach high-teens to 20% annual growth through the end of the decade. The upgrade was the first in over a year and follows increased estimates for fiscal 2026 and 2027.
JPMorgan’s analyst team, led by Matthew Boss, lifted its rating on Nike from Neutral to Overweight and boosted its price target to $93, implying nearly 20% upside from Monday’s open. The bank’s note pointed to stronger holiday order books, leaner inventory levels, and a revitalized product pipeline as key signals that the "Win Now" strategy is starting to pay off.
Shares responded immediately, rising over 4% in early trading to hit their highest level in five months. The momentum comes on the heels of a better-than-expected fourth quarter, where revenue topped analyst estimates despite a 12% year-over-year decline. Management's guidance for a sequential improvement gave bulls further reason to cheer.
According to JPMorgan, Nike’s potential earnings recovery could reach high-teens to 20% annual growth through the end of the decade. The upgrade was the first in over a year and follows increased estimates for fiscal 2026 and 2027.
Cost Relief and Fresh Products Support Margin Recovery
A critical tailwind for Nike’s outlook is the recently announced U.S.–Vietnam trade agreement, which has helped neutralize a projected $1 billion tariff hit in fiscal 2026. That relief eases pricing and margin pressures at a time when Nike is aggressively clearing out old inventory via discount-heavy factory store sales. With the heaviest cost burden now absorbed, the path to higher gross margins—currently at 40.3%—looks clearer.
Performance-oriented product innovation also plays a central role. New launches such as the Pegasus Premium and Vomero 18 are gaining traction among serious runners, suggesting Nike’s shift back to athletic roots is resonating. Meanwhile, updates to its wholesale playbook and a stronger presence in sports like soccer—especially with the World Cup coming to the U.S. next year—are expected to bolster brand momentum and top-line growth.
China Challenges Persist, But Long-Term Outlook Brightens
Despite domestic and international progress, Nike still faces headwinds in Greater China. Revenue in the region dropped 20% last quarter amid weakening consumer sentiment and rising nationalistic competition. Analysts warn that unless addressed, this drag could undercut global growth projections.
Yet Nike’s balance sheet remains resilient. The company closed the fiscal year with over $9 billion in cash and equivalents, and returned $2.3 billion to shareholders through dividends. With a quarterly payout of $0.40 per share and 23 consecutive years of dividend hikes, the stock maintains appeal for income-focused investors.
Nike’s stock is now up over 7% this month and has crossed a key technical resistance point for the first time since 2021, signaling a potential trend reversal. Analysts from both JPMorgan and Goldman Sachs now forecast continued upside, with Goldman recently raising its target to $85 and maintaining a "Buy" rating.
Conclusion
Nike’s latest stock rally reflects more than just analyst optimism—it signals renewed investor belief in the company’s ability to navigate economic turbulence and reignite growth. With cost pressures easing, inventory levels aligning, and a sharper focus on performance products, Nike is positioning itself for a multiyear rebound. Challenges remain, particularly in China, but Wall Street’s message is clear: the turnaround is in motion, and for now, it’s time to “Just Buy It.”
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