HSBC upgrades Nike shares after earnings beat, says inflection is 'finally here'
Nike is poised to see even more gains following its better-than-expected results for the fiscal fourth quarter, HSBC said on Friday. The firm upgraded the sneaker giant to buy from hold, marking its first buy rating on the stock in three and a half years. It also raised its price target on the name by $20 to $80, which implies about 28% upside from Thursday's close. This comes as shares surged more than 9% in the premarket Friday after Nike beat analyst expectations on the top and bottom lines. While the company said that President Donald Trump's tariffs are anticipated to cost it $1 billion prior to price hikes, it also said it expects to see profits and sales declines moderating in the future. "Long in the making but we think the inflection is finally here," analyst Erwan Rambourg wrote in a Friday note to clients. "We think there is more than tangible evidence that Nike has a path to see its sales rebound in the not-too-distant future, and its margins to be repaired, and this despite an unfavorable tariff headwind which the group believes could weigh for 75 [basis points] on gross margin in FY May 2026." Along with seeing better sales momentum and gross margin pressures easing later in the year, the analyst pointed to management "not cutting corners and is committed to quality." On that front, he said that the repositioning of Nike's digital business as one that's full price could be beneficial for the company in the long term. When it comes to the company's growth trajectory, however, he thinks investors should not expect a V-shaped recovery but rather a swoosh similar to the company's logo. "Management was clear on the fact that there is no easy fix and that a combination of clearance, soft China and tariff hit will make Q1 ending August somewhat tricky with sales and margins down," he wrote. "Tariff mitigating factors will also ramp up gradually." With his call, Rambourg joined 18 other analysts with a strong buy or buy rating on Nike, per LSEG. By contrast, 20 analysts out of the 41 total that are covering it have a neutral view of the stock with a hold rating. Other analysts also held an optimistic view of Nike following its latest quarterly results. Goldman Sachs, which also has a buy rating on the stock, said the company is "approaching trough earnings," adding that it's "early in its transformation journey." Additionally, Bernstein, which has an outperform rating on the retailer, similarly said it expects a "gradual recovery." This year, the stock has fallen more than 17%, underperforming the S & P 500's more than 4% in the period.
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