Nike (NKE) stock was up about 2% in Wednesday’s pre-market trading as John Kernan, a top analyst at TD Cowen, upgraded the athletic apparel and footwear company to Buy from Hold, saying that “margin recovery is underappreciated” in the Street’s consensus estimates on a multi-year basis. Kernan raised his price target for NKE stock from $62 to $85, indicating 15% upside potential from current levels.
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TD Cowen Analyst Turns Bullish on NKE Stock
Kernan cited three reasons that he expects will support Nike’s turnaround. Firstly, the 5-star analyst highlighted that Nike is an iconic global sports brand, with the potential to grow its earnings per share (EPS) to more than $4 and free cash flow (FCF) to $6 billion, backed by expectations of improvement in margins.
Secondly, Kernan is confident about the new management team’s execution. Finally, the top analyst cited improving business trends. Notably, TD Cowen’s fieldwork and checks indicate gradually improving trends for Nike and Jordan brands in both footwear and apparel offerings. Furthermore, Kernan noted a decline in “brand heat” among competitors like New Balance, Adidas (ADDYY), Saucony, Skechers (SKX), and Asics (ASCCF), leaving more room for dollar growth at Nike.
Kernan expects Nike to return to sales growth in Fiscal Q4, excluding the impact of foreign exchange changes, with growth increasing to mid-single-digit percentages in Fiscal 2027.
Is Nike Stock a Buy, Sell, or Hold?
Nike stock is down 3% year-to-date, with the company struggling due to intense competition, tariffs, and a lack of innovation.
Overall, Wall Street has a Moderate Buy consensus rating on Nike stock based on 18 Buys and 12 Holds. The average NKE stock price target of $80.92 indicates 10% upside potential from current levels.
