Banking giant HSBC has issued a bullish revision on Nike (NYSE: NKE) stock following the sportswear manufacturer’s latest earnings report.
On June 27, HSBC upgraded Nike to ‘Buy’ from ‘Hold’ and raised its price target to $80 from $60, citing tangible evidence supporting a sales recovery and margin improvement.
Analyst Erwan Rambourg acknowledged Nike’s challenging period over the past four years, noting that
“the willingness of investors to hold Nike shares and the sell-side enthusiasm on the name have come as a surprise to us since we started covering the stock 20 years ago.”
The analyst admitted that Nike’s previous perception of invincibility “was bluntly disproven over the past four years.”
However, HSBC shares in the renewed enthusiasm, believing Nike has
“a path to see its sales rebound in the not-too-distant future, and its margins to be repaired.”
Factors driving the upgrade
The analyst praised Nike’s new management team under CEO Elliott Hill, who rejoined in October, for prioritizing quality over quick fixes. HSBC particularly highlighted “the repositioning of the digital channel as an elevated full price one should be beneficial for the long term.”
After another two quarters of inventory clean-up, with Air Force 1 appearing stable while Dunk continues to face challenges, Rambourg believes “the bulk of the brand assortment should be current and exciting.”
The upgrade comes despite headwinds from tariff pressures, which Nike expects could weigh 75 basis points on gross margin in fiscal year 2026.
Nike stock surges despite earnings challenges
Nike’s stock price responded positively to its latest earnings call, surging 12% in after-hours trading despite mixed quarterly results. The company reported earnings per share of 14 cents, slightly beating estimates, though sales declined 12% to $11.1 billion. Net income plummeted 86% to $211 million from $1.5 billion in the prior year.
The athletic giant faces significant headwinds from new tariffs on Chinese goods, expecting a $1 billion impact in fiscal 2026. Currently, about 16% of Nike’s supply chain runs through China, though the company plans to reduce this to high single digits by next summer as part of its ‘Win Now’ strategy.
HSBC’s $80 price target represents a significant 28% upside from Nike’s current trading price of $62.54. The stock has struggled year-to-date, declining 17.35% before the recent earnings-driven rally.
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