Nike: Buy Rating Backed by North America-Led Turnaround, Inventory Discipline, and Multiyear Recovery Potential

Lorraine Hutchinson, an analyst from Bank of America Securities, reiterated the Buy rating on Nike. The associated price target remains the same with $73.00.

Lorraine Hutchinson has given his Buy rating due to a combination of factors that, in her view, outweigh current margin and macro headwinds. While Nike’s gross margin is pressured by higher tariffs and softness in China and Converse, she expects some sequential improvement in the second half of the year and sees additional upside if the company selectively raises prices, which is not yet reflected in guidance. She also notes that North America is showing meaningful progress and is central to the company’s turnaround story, with wholesale growth and strong unit trends in key categories helping to offset weakness elsewhere. The current share price relative to her price objective suggests an attractive risk/reward profile, supported by consensus earnings expectations that indicate further profit recovery over the next few years.
In addition, she highlights that inventory levels are largely under control in the most important regions, with North America and EMEA—roughly three quarters of the business—described as having returned to a healthier marketplace. Areas that still require inventory cleanup, such as Greater China and APLA, are being actively managed, which should help normalize margins and demand over time. She also points out that Nike’s decision to pause share repurchases in order to preserve cash for dividends and reinvestment in brand-building, marketing, and retail environments, especially ahead of major global sporting events, should support long-term demand. Taken together, these operational improvements, disciplined inventory management, and strategic investments underpin her confidence in Nike’s multiyear recovery potential and justify maintaining a Buy recommendation.

In another report released yesterday, Bernstein also maintained a Buy rating on the stock with a $85.00 price target.