Nike, the Consumer Cyclical sector company, was revisited by a Wall Street analyst today. Analyst Lorraine Hutchinson from Bank of America Securities maintained a Buy rating on the stock and has a $84.00 price target.
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Lorraine Hutchinson’s rating is based on Nike’s strategic efforts to address inventory challenges and the potential for future growth. Nike has been actively working to clear excess inventory through markdowns and repurchase agreements, which is expected to conclude soon. This cleanup is anticipated to pave the way for a return to growth in the second half of fiscal year 2026. The recent decline in gross margins, particularly due to increased discounting, is seen as a temporary measure to facilitate inventory clearance.
Additionally, the new regional margin disclosures provided by Nike reveal opportunities for margin improvement, especially in China where gross margin has been a significant factor in EBIT margin degradation. Despite a decline in sales driven by lower units, the company’s strategic focus on innovation and managing promotional activities is expected to stabilize and potentially enhance gross margins in the future. These factors collectively support the Buy rating, as they indicate a positive outlook for Nike’s financial performance moving forward.
In another report released on July 21, Goldman Sachs also maintained a Buy rating on the stock with a $85.00 price target.