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Investing.com - KeyBanc maintained its Sector Weight rating on Nike (NYSE:NKE) stock following the company’s better-than-expected fourth-quarter results. The sportswear giant, with a market cap of $92.3 billion and a prominent position in the Textiles, Apparel & Luxury Goods industry according to InvestingPro, is beginning to see positive effects from its strategic initiatives, with signs of a less promotional marketplace emerging.
Nike reported that its inventory is expected to reach a clean position by the end of the first half of fiscal 2026. The company also noted an encouraging sign that its holiday order book has increased year-over-year, suggesting potential improvement in future quarters. This comes as Nike maintains strong liquidity with a current ratio of 2.19, though InvestingPro data indicates analysts anticipate an 11% revenue decline for the current fiscal year.
KeyBanc highlighted that the fourth quarter experienced what will likely be the largest headwind from Nike’s rightsizing efforts. While these pressures are expected to begin easing, some challenges will persist throughout fiscal year 2026, particularly due to declines in digital sales, classics products, and the comparison against previous promotional activities.
The research firm acknowledged initial progress on actions taken by Nike thus far in its turnaround efforts. However, KeyBanc believes considerable work remains ahead for the athletic apparel and footwear maker.
The difficult macroeconomic environment, combined with Nike’s ongoing transformation, has led KeyBanc to remain uncertain about the timeline for a significant business inflection, supporting its decision to maintain the Sector Weight rating on the stock. According to InvestingPro, the stock currently appears slightly undervalued, with 8 analysts revising their earnings estimates upward for the upcoming period. For deeper insights into Nike’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Nike reported its fourth-quarter 2025 earnings, surpassing expectations with an earnings per share of $0.14, compared to the forecast of $0.12, and achieving revenue of $11.1 billion against a projected $10.7 billion. Despite a 12% year-over-year revenue decline, the company continues to focus on strategic initiatives that show promise. HSBC upgraded Nike’s stock rating to Buy, raising its price target to $80, citing evidence of a potential sales rebound and inventory stabilization. Meanwhile, Citi raised its price target for Nike to $68 from $57, noting that fourth-quarter sales exceeded expectations, although gross margins were slightly weaker. Additionally, Telsey Advisory Group maintained its Market Perform rating on Nike, with a price target of $70, as the company navigates structural challenges during its transformation. These developments are part of Nike’s ongoing efforts to reposition its brand and address inventory issues. Nike’s management has guided for a mid-single-digit decline in first-quarter revenues, with future growth expected from new partnerships and distribution strategies.
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