NIKE (NKE) Stock Forecast & Price Target

Nike's strong outlook is supported by improved gross margins, which surpassed guidance by 120 basis points year-over-year, indicating effective cost management and pricing strategies amidst a growing global activewear market. The acceleration of its direct-to-consumer (DTC) strategy and market share gains suggest a solid positioning for future growth, particularly as consumer interest in key product lines rises and supply chain innovations enhance efficiency. Additionally, the anticipated positive sales, margin, and earnings growth in fiscal 2H26, driven by new product innovations and improved performance among select franchises, underscores the company's resilience and potential in a favorable macroeconomic environment.

Nike is facing a challenging financial outlook, with forecasts indicating a deterioration of constant-FX revenue trends to low-double-digits (LDD) declines, alongside a significant anticipated decline in gross margin by 300-350 basis points as the company addresses excess inventory. The firm has projected a possible further decline in revenue trends under bear case assumptions, indicating the potential for earnings per share (EPS) to drop to approximately $1.75. Additionally, the company's guidance reflects sustained gross margin and EBIT margin declines, emphasizing ongoing pressures from both sales and cost management, which is compounded by a slight reduction in selling, general, and administrative (SG&A) expenses despite a double-digit revenue decline.