Nike stock upgraded to Buy at HSBC on expected sales rebound

Investing.com - HSBC upgraded Nike (NYSE:NKE) stock rating from Hold to Buy on Friday, raising its price target to $80.00 from $60.00. The sports apparel giant, currently trading at $62.54 with a market capitalization of $92.31 billion, has seen its stock decline over 16% year-to-date.

The upgrade comes as HSBC sees "tangible evidence" that Nike has a path to sales recovery in the near future, despite facing headwinds including potential tariff impacts that could weigh on gross margins in fiscal year 2026. According to InvestingPro, 8 analysts have revised their earnings upwards for the upcoming period, suggesting growing confidence in the company’s prospects.

HSBC noted that Nike is expected to complete its inventory clean-up over the next two quarters, with Air Force 1 inventory stabilizing while Dunk inventory still requires adjustment, after which "the bulk of the brand assortment should be current and exciting."

The research firm expressed approval of Nike’s new management team under CEO Hill, who rejoined the company in October, citing their commitment to quality rather than "cutting corners" in their approach to rebuilding the brand.

HSBC specifically highlighted Nike’s repositioning of its digital channel as "an elevated full price one" as a positive strategic move that "should be beneficial for the long term." Trading slightly below its InvestingPro Fair Value, Nike maintains a P/E ratio of 20.66 and generates annual revenue of $47.82 billion, positioning it as a prominent player in the Textiles, Apparel & Luxury Goods industry.

In other recent news, Nike Inc. reported its fourth-quarter 2025 earnings, surpassing market expectations with an earnings per share (EPS) of $0.14, compared to the forecast of $0.12. The company’s revenue also exceeded projections, reaching $11.1 billion against an anticipated $10.7 billion. Despite these positive results, Nike faced a 12% year-over-year decline in revenue, with gross margins dropping by 440 basis points. Analysts from firms like JPMorgan and Oppenheimer have noted these developments, emphasizing the company’s strategic initiatives aimed at future growth. Nike’s management has indicated that new partnerships and distribution strategies are expected to drive future growth, despite current challenges such as tariff impacts and supply chain disruptions. The company has also announced a new partnership with Amazon (NASDAQ:AMZN), which will feature a select assortment of Nike’s footwear and apparel. Looking ahead, Nike anticipates a decline in Q1 revenues in the mid-single digits, with gross margins expected to remain under pressure. Nonetheless, the company remains focused on mitigating tariff impacts and aims to achieve sustainable organic growth.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.