Could the iconic swoosh be gearing up for a surprise sprint in the latter half of the year? As whispers of a potential turnaround ripple through Wall Street, Nike Inc. (NYSE:NKE) is signaling progress toward a second-half recovery, with improving sales trends, cleaner inventories, and stronger wholesale orders.
Analysts pointed to stabilizing margins and healthier back-to-school demand as signs that Nike’s turnaround is gaining traction despite tariff headwinds.
Bank of America Securities analyst Lorraine Hutchinson maintained a Buy on Nike with a price forecast of $84.
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Hutchinson said Nike remains on track for stabilization in the second half of the fiscal year, with guidance for second-quarter sales expected to show sequential improvement from the mid-single-digit decline in the first quarter. The analyst noted that solid U.S. back-to-school trends should support Nike’s performance.
A message of healthier sales momentum and confirmation that inventory levels are on track to be clean by the end of the first half would reinforce her view that the recovery is progressing.
Hutchinson emphasized that Nike’s wholesale order book continues to strengthen. Fall orders outside China improved in the third-quarter, and the total holiday order book turned positive in the fourth, the analyst said. She noted that further confirmation of improvement in Spring orders, along with evidence that prior bookings are unfolding as planned, would instill market confidence in both the new leadership team’s strategy and retailers’ enthusiasm for upcoming products.
Hutchinson trimmed her fiscal 2026 and 2027 EPS estimates by $0.06 and $0.02 to $1.54 and $2.77, respectively, to account for higher tariffs. Nike previously quantified a 75-basis-point gross margin headwind in fiscal 2026 based on exposure of 30% to China and 10% to the rest of the world. Still, the analyst assumes an incremental 50-basis-point headwind as rest-of-world exposure increases to 20%. She expects Nike to offset the tariff impact over time, but said it will depend on sales’ positive impact.
On margins, Hutchinson forecast that gross margin will stabilize in the second half after several quarters of steep declines. The analyst pointed to tailwinds, including stronger full-price sales from fewer promotions, reduced wholesale buybacks, lapping low-margin off-price sales, and pricing actions to counter tariffs. At the same time, she acknowledged that product mix, channel mix, and tariff costs remain headwinds.
NKE Price Action: Nike shares were up 0.16% at $72.87 at the time of publication on Wednesday. The stock is trading within its 52-week range of $52.28 to $90.62, according to Benzinga Pro data.
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