Nike’s Financial Outlook: Hold Rating Amid Weak Margins, Inventory Challenges, and Long-Term Recovery Strategy

Analyst Paul Lejuez of Citi maintained a Hold rating on Nike (NKE – Research Report), retaining the price target of $72.00.

Paul Lejuez has given his Hold rating due to a combination of factors impacting Nike’s financial outlook. The company’s recent earnings report showed stronger sales and lower SG&A/taxes, but gross margins were weaker than expected. Management’s guidance for the fourth quarter indicates a further decline in sales and earnings, with a projected low point for both sales and gross margin trajectory.
Additionally, Nike is facing challenges with high inventory levels across all regions and a particularly weak performance in China, which is expected to take longer to recover. The company’s “Win Now” strategy appears to be a long-term effort, with anticipated pressure on sales and gross margins in the first half of the fiscal year 2026. Given these factors, along with the expectation of another year of declining sales and earnings, the projected earnings per share of $3.00 is not expected until fiscal year 2028, making the current price-to-earnings ratio unattractive.

In another report released today, Barclays also maintained a Hold rating on the stock with a $70.00 price target.