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Investing.com --Shares of Nike (NYSE:NKE) rose about 2% on Monday after JP Morgan upgraded the stock to Overweight saying it sees signs of recovery in inventory levels, retailer demand, and profit margins.
The brokerage said the company appears to be turning a corner after a period of weak sales and heavy discounting, and raised its price target to $93 for December 2026.
The upgrade follows meetings with Nike executives and a review of the company’s annual regulatory filing.
Nike expects to restore balance between inventory and sales by the end of the second quarter of fiscal 2026, after taking about $500 million in charges to clear unsold merchandise in the second half of fiscal 2025.
That reset could help revenue comparisons in the coming year, JP Morgan said.
Retailers are also placing more orders for upcoming seasons, especially in North America and Europe, suggesting underlying demand may be improving.
The company has launched new products in running and basketball, which have shown early signs of traction.
Margins, which were hit by promotions and excess stock, are expected to recover gradually. JP Morgan forecasts Nike’s operating margin to rise to 10% by fiscal 2028 from 5.3% estimated for fiscal 2026.
The brokerage lifted its earnings estimate for fiscal 2026 to $1.32 per share, from $1.07 earlier, though that remains below analysts’ average forecast of $1.62.
Nike’s shares have fallen roughly 20% so far this year, underperforming both the broader market and rivals such as Adidas (OTC:ADDYY) and Lululemon (NASDAQ:LULU), as it contended with soft demand in China and a slowdown in its classic footwear lines.