On Monday, BMO Capital Markets maintained its Outperform rating on Nike Inc (NYSE:) with a steadfast $92.00 price target. Currently trading at $72.72 and near its 52-week low, Nike maintains a solid financial health score of “GOOD” according to InvestingPro analysis, despite 22 analysts recently revising their earnings expectations downward. The firm’s analysis of Nike’s recent 10-Q filing revealed several key findings, including changes in unit and average selling price (ASP) inflections, weaker gross margins (GMs) in North America, China, and EMEA due to inventory reserves, and divergences between margins and direct-to-consumer (DTC) performance.
With current gross margins at 44.73% and revenue showing a decline of 4.97% over the last twelve months, these challenges are reflected in the company’s financial metrics. Additionally, inventory levels were reported to be declining in the Asia Pacific and Latin America (APLA) and EMEA regions, while increasing in North America and China.
BMO Capital’s scrutiny of the financial document highlighted the company’s regional performance, including sales through different channels, comparable performance, drivers of unit and ASP, margin breakdowns, and inventory changes. The firm is prepared to provide a comprehensive, historical summary of this regional data to interested parties.
The analyst at BMO Capital expressed confidence in Nike’s potential for a comeback, emphasizing the brand’s historic strengths such as superior storytelling, research and development, and strategic partnerships for distribution. For deeper insights into Nike’s competitive position and detailed financial analysis, InvestingPro subscribers can access comprehensive Pro Research Reports covering 1,400+ top stocks, including Nike’s complete financial health assessment and future growth prospects. Despite the current challenges, the firm believes that Nike has the capability to leverage these strengths to regain its competitive edge.
The analysis by BMO Capital suggests that while Nike faces headwinds with gross margins decelerating across various regions and inventory adjustments being made, there is a path forward. The firm’s reiteration of the $92.00 price target reflects an expectation that Nike will navigate these challenges and continue to outperform in the market.
Investors and stakeholders in Nike Inc can expect the company to focus on its core competencies to address the issues identified in the BMO Capital report. By doubling down on its competitive advantages, Nike aims to overcome the current margin pressures and inventory imbalances.
In other recent news, Nike has been the subject of several analyst adjustments due to inventory challenges and future product innovation.
UBS maintained a Neutral rating on Nike, citing potential near-term earnings risks due to inventory management and product pipeline issues. Meanwhile, Baird continued to endorse an Outperform rating on Nike’s shares, despite a lowered price target, anticipating a strong product-led inflection by fiscal year 2026.
Stifel reduced its price target for Nike to $75, maintaining a hold rating based on estimated earnings per share of $2.88 for fiscal year 2027. Additionally, the firm expects a significant drop in Nike’s gross margins. On the other hand, Truist Securities adjusted its outlook on Nike, lowering the price target to $90 while retaining a Buy rating on the stock.
TD Cowen revised its price target for Nike, reducing it from $73 to $69, maintaining a hold rating and expressing concerns over potential reductions in Nike’s FY26 EPS. These recent developments come as Nike welcomes its new CEO, Elliott Hill, who aims to reestablish the brand’s roots in sports and athleticism.
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