BMO remains positive on Nike stock following new product checks

On Friday, BMO analysts issued an update on Nike , Inc. (NYSE:NKE), a prominent $97 billion player in the Textiles, Apparel & Luxury Goods industry, highlighting the company’s continued success in the running category and observing a slight improvement in the Air Force 1 and Dunk franchises. According to InvestingPro data, Nike maintains a solid gross margin of 44% despite recent market challenges. BMO’s report suggests that Nike’s new running products, such as the Vomero 18, Pegasus Premium, and Zoom (NASDAQ:ZM) Fly 6, are performing well in the market, comparable to top models from competitors like Hoka and On.

According to BMO, the Vomero 18, which is a new max cushion offering, has had a strong start. Additionally, the Pegasus Premium has been released twice and sold out on both occasions. The Zoom Fly 6 continues to show robust performance. These observations align with Nike’s recent statements about the running category, and BMO views these data points as promising for the company’s future.

The report also notes that while scaling up is necessary for significant impact on Nike’s financials, especially as the company aims to reduce its reliance on classic models, the current trends are encouraging. This strategic shift comes as InvestingPro analysts forecast an 11% revenue decline for the current fiscal year, highlighting the importance of successful new product launches. BMO analysts are tracking these launches closely and have detailed checks available in their report for those interested in the specifics of their analysis.

Furthermore, BMO has seen a slight improvement in the Air Force 1 (AF1) and Dunk franchises in March compared to the previous month. After a notable increase in promotions from January to February, which is typically a negative sign indicating excess inventory, March saw less promotional activity month-over-month across retailers for these franchises. The checks also revealed that Nike.com ended March with a wider variety of AF1s and Dunks on sale compared to other retailers like Foot Locker (NYSE:FL) and JD.

Overall, BMO’s recent checks suggest that Nike is making progress with its new product launches in the running category and is managing inventory levels better for its AF1 and Dunk lines. The analysts remain positive on Nike stock as the company continues to innovate and adjust its product strategies. With the stock trading near its 52-week low of $64.95 and showing a 26% decline over the past six months, InvestingPro analysis suggests the stock is currently fairly valued. Subscribers can access 12 additional ProTips and a comprehensive Pro Research Report covering Nike’s detailed financial health metrics and future outlook.

In other recent news, Nike’s financial performance and strategic moves have garnered attention from various analysts. Nike’s earnings and revenue have been a focal point, with Piper Sandler projecting a significant decline in sales for Nike’s Classics franchises, which is expected to impact total sales negatively in the coming fiscal years. Meanwhile, Jefferies has maintained a Buy rating for Nike, with a $115 price target, highlighting the potential for sales recovery and margin improvement if Nike’s sales reach $50 billion and grow steadily. DA Davidson also reiterated a Buy rating, setting a $273 price target, noting that Nike’s North American business outperformed expectations, with a smaller-than-anticipated decline and an increase in wholesale revenues.

Truist Securities, however, lowered its price target to $82 while maintaining a Buy rating, citing the need for intensified turnaround strategies that may strain Nike’s fiscal year 2026 outlook. UBS also adjusted its price target down to $66, maintaining a Neutral rating due to concerns over Nike’s earnings outlook and the need for significant improvements in product and marketing strategies. Despite these challenges, UBS noted Nike’s increased short-term investments aimed at fostering long-term growth, suggesting the possibility of a positive turnaround.

These developments reflect a mixed but cautiously optimistic view from analysts on Nike’s current challenges and future potential. Investors are closely watching Nike’s strategic decisions, particularly as the company seeks to navigate its turnaround plans and achieve growth objectives. Analyst assessments from firms like Jefferies, Piper Sandler, DA Davidson, Truist Securities, and UBS provide insights into Nike’s market position and potential trajectory.

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