NIKE Inc. (NYSE: NKE) is a turnaround stock that is proving to take a long time to turn around. This week’s earnings reports contained some good news for long-term investors, while also highlighting just how persistent and difficult some of its challenges are to overcome. The stock did close higher for the week, but Friday’s sell-off added some concerns for long-term and short-term investors alike.
Oggonomics has evaluated the post-earnings reaction from Wall Street and Main Street alike. As noted above, there is some good news and some caution as well. Despite new leadership and a continually streamlined operation, the post-earnings reaction shows how difficult running maturing companies can be difficult to execute rapid turnarounds.
A very brief summary of earnings may help assess how turnarounds can be. Nike’s first quarter of fiscal year 2026 showed that revenues rose by 1% to $11.7 billion (versus consensus estimate of $10.99 billion) with better-than-expected sales in most key markets — with Greater China and Converse segments showing weakness. Nike’s direct sales were down 4%, revenue from Greater China was -9%, and Nike’s gross margin fell to 42.2% from 45.4%.
Nike’s guidance also showed a mixed picture for Q2-2026 and for this fiscal year. Revenue is expected to decline in the low-single-digit pace after a 1% increase in Q1/2026. Gross margin is now forecast to narrow by another 350-375 basis points. Nike maintained that 2026 should see solid growth in wholesale sales with continued weakness in Nike’s direct sales. The company is mitigating some of its tariff exposure, but the concerns of Nike are a persistent theme for the company and for peers and rivals that rely upon overseas production and sourcing.
The larger look-back shows ongoing Nike’s challenges. Fiscal Year 2025 revenues were down 10% to $46.3 billion, and its diluted earnings fell to $1.82 EPS in 2025 versus $3.95 EPS in 2024. Consensus estimates are now $1.69 EPS for FY/2026 and $2.52 EPS for FY/2027. Consensus revenues are looking for very marginal recovery to $46.8 billion in 2026 and $49.2 billion in 2027.
Nike does have some valuation concerns. If Nike can get back to its peak earnings, it would be valued at just 19-times earnings. Consensus earnings estimates have Nike currently valued at about 42-times earnings for FY/2026 and about 29-times earnings for FY/2027.
Nike’s peak annual revenue was $51.36 billion in FY/2024 with earnings that year of $3.76 per share.
Nike’s post-earnings stock reaction was initially positive. After closing at $69.73 ahead of earnings, Nike’s day-one earnings reaction was up 6.4% to $74.20. Friday’s trading showed a 3.5% drop to $71.93. The good news — its stock still closed up 3.8% on Friday versus the prior week’s closing price of $69.31. Nike’s 52-week range is $52.28 to $84.76, and it now has a $106 billion market cap. Just keep in mind that Nike’s stock hit an all-time peak of close to $177 back in 2021.
Nike’s dividend of $1.60 per share generates a dividend yield of 2.2%. With earnings weakness persisting, it may be harder for Nike to continue with the dividend hikes seen over the last decade if earnings do not recover more rapidly than anticipated.
Wall Street had a lot to add after the earnings report in the two days after the earnings report. There was only one formal upgrade tracked this week, with no formal downgrades seen from major firms. Some firms reiterated their prior price targets and other firms raised their price targets without formal ratings changes. These ratings and price targets below are the opinions of each firm named.
KeyBanc Capital Markets was the only sizable analyst upgrade after earnings. The firm raised its rating to Overweight from Sector Weight and set a $90 price target on the sports shoe and apparel maker.
BofA Securities reiterated its Buy rating and maintained its $84 price objective. Its keynote — “Sales improvement provides evidence that plan is working.”
Argus reiterated its Buy rating and $85 price target, with keynotes: “executing ahead of schedule; most of the company’s products are up-to-date and attracting customers; utilizing its e-commerce channel to improve pricing.”
Goldman Sachs reiterated its Buy rating with a $89 price target, while Oppenheimer reiterated its Outperform rating and $120 price target.
These are the firms that were seen raising price targets while maintaining their formal analyst ratings:
- Barclays (Equal Weight) target raised to $70 from $65, after its target was raised to $65 from $64 on 9/18
- JPMorgan (Overweight) target raised to $100 from $93
- Morgan Stanley (Equal-Weight) target raised to $72 from $70, after its target was raised to $70 from $64 on 9/23
- Piper Sandler (Overweight) target raised to $84 from $80
- Stifel (Hold) target raised to $68 from $64
- TD Cowen (Buy) target raised to $86 from $85
Major financial news media outlets had multiple key headlines for its brief synopsis from Wednesday through Friday:
- Nike Sales Rise but Warns of Continued Weakness in China (Barron’s)
- Nike’s Turnaround is Taking Shape (DJ Market Talk)
- Nike and Adidas Duopoly is Back (DJ Market Talk)
- Nike’s Product, Distribution Improvements Start to Pay Off (DJ Market Talk)
- Nike’s 1Q Results Seen as Another Big Step Forward (DJ Market Talk)
- Nike Makes Broader Progress than Anticipated (DJ Market Talk)
- Nike rebound gains momentum as China, tariffs cast a cloud (Reuters)
- Nike turnaround takes root, CEO warns of more work ahead as China lags (Reuters)
- Nike has frustrating news for customers (TheStreet)
- Nike thumps expectations despite 31% fall in earnings (Financial Times)
- Nike’s Turnaround: If the Shoe Fits, Buy It (Investing.com)
Should investors use AI summaries for determining the good, bad and neutral views for short-term or long-term expectations? A shortened A.I. summary from Claude (Anthropic)… Question: Based on long-term trends and assessing the latest earnings report this week, is Nike looking better or worse for long-term shareholders?… Shortened answer: Nike looks somewhat better for long-term shareholders, but with significant caveats…. For patient long-term investors willing to endure near-term volatility, the risk-reward may be favorable. For those seeking near-term growth, Nike remains a work in progress.
There you have it. Now Nike just has to try to keep executing its turnaround.
Please note that all analyst ratings and price targets mentioned above are from each firm specifically named in this reporting. Oggonomics maintains no formal rating and does not have any price target of its own for Nike. Also please keep in mind that no analyst reports calling for higher or lower price targets ever come with any assurances or guarantees. Analysts can get their thesis wrong, and company or market fundamentals can change in an instance.
