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Investing.com -- Jefferies analysts upgraded Nike (NYSE:NKE) to Buy and raised their price target for the stock to $115 in a note Monday, citing the company’s turnaround efforts under CEO John Donahoe.
"CEO Hill is tackling product and distribution issues head-on, positioning the brand to again outgrow the market and take back lost share," the analysts wrote, naming Nike as a new top pick.
Despite recent struggles, Jefferies sees a strong path forward for Nike. "Survey work illustrates NKE’s brand remains very strong, proving that issues were self-inflicted and competitive threats less severe."
They project a V-shaped margin and EPS recovery in fiscal 2027, with earnings estimates at $3.50 per share, well ahead of consensus estimates of $2.95.
Nike has lost market share in recent years, particularly due to strategic missteps such as "reduced product innovation and overemphasis of Nike Digital." The company’s footwear share declined 140 basis points from its peak in 2020 to 23% in 2023. However, Jefferies sees this as a turnaround opportunity, with Nike expected to defend and maintain a low- to mid-20% share.
One key initiative is said to be restoring wholesale partnerships and refocusing on product innovation.
"Job listings for product positions have increased from 1% of average monthly listings in F’24 to 10% of active listings in F’25 YTD," Jefferies noted, highlighting Nike’s commitment to reinvigorating its lineup.
Looking ahead, Jefferies believes Nike’s "low 30s multiple on F’27 EPS" justifies a valuation re-rating as earnings rebound. "We see upside of near 20% to Street EPS in F’27, and believe, and believe a low 30s multiple on F’27 EPS ($3.50 vs Street near $3.00) is appropriate as shares will re-rate as EPS rebounds and the market then chases the turn in fundamentals."