Nike stock bolted higher Friday after receiving a number of price-target hikes. Q4 results reported late Thursday topped analyst estimates.
Nike posted earnings of 14 cents per share, beating FactSet expectations for 11 cents. Revenue fell nearly 12% to $11.1 billion, but still came in ahead of views for $10.73 billion.
North American revenue fell 11%, while sales in Greater China tumbled 21%. Nike Direct revenue declined 14% and wholesale revenue fell 9%. Nike's digital sales fell 26%, slightly offset by a 2% sales increase at Nike stores.
Overall footwear sales were down 13%, with a 10% drop in apparel revenue.
CEO Elliott Hill said the results were in-line with company expectations, but "not where we want them to be." He expects the business to improve as Nike makes progress on its turnaround initiatives. CFO Matthew Friend said Q4 saw the largest financial impact from its actions, and expects headwinds to moderate going forward.
The company plans to continue liquidating its excess inventory to value stores and partners over the next two quarters.
For Q1, Nike expects revenue to decline in the mid-single digits, with a 350 basis point to 425 basis point drop in gross margins, Friend said in the earnings call. That includes about a 100 basis point hit due to tariff impacts.
Analysts React
JPMorgan raised its price target on Nike stock to 64 from 56 on results and kept a neutral rating on the shares, The Fly reported. The firm noted that Nike's guidance represents an underlying demand trend improvement of 100 basis points compared to Q4.
BofA believes that the "worst is behind" Nike, according to a Friday research note, and expects sequential sales improvements with a return to growth in the second half of 2026. The firm lowered its 2026 earnings forecast by 20 cents to $1.60 per share to reflect lower gross margins from tariffs. But BofA has greater confidence in Nike's innovation pipeline and upcoming sales inflection. BofA raised its price target on NKE stock by $4 to 84 and kept a buy rating on the shares.
HSBC on Friday raised its price target on Nike shares to 80 from 60 and upgraded the stock to buy from hold. The report noted "tangible evidence" that Nike is on a path for a sales rebound in the "not-too-distant future," The Fly reported. The firm believes that Nike can repair its margins despite unfavorable tariffs. Once the two-quarter inventory clean up is completed, Nike's product assortment "should be current and exciting," HSBC wrote.
Nike Stock Rallies Early
NKE shares rallied 15.2% Friday.
A weekly chart for Nike stock shows it has bounced back and forth as it consolidates after retaking support at its 10-week moving average.
Shares have rebounded about 38% from their April low. The stock is attempting to exit a long-term downtrend that followed a record high of 179.10 in November 2021.
NKE stock has pared its decline on the year to just 4.8%.
Nike has a 21-day average true range ratio of 2.61%.
The average true range is a metric available on IBD's MarketSurge that gauges the characteristic breadth of a stock's behavior. Stocks that tend to make large jumps or dives in daily action, the kind that can trigger sell rules and shake investors out of a stock, have a high ATR. Stocks that tend to make more incremental moves have lower ATRs.
With the S&P 500 and Nasdaq now in a power trend, investors can buy stocks with ATRs up to 8%, though they should be wary of being too concentrated in high-octane names.
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