Nike (NKE:NYSE) $71.04

Loss to date: 10.5%

We highlighted sportswear giant Nike’s (NKE:NYSE) recovery potential at $79.43 in March, observing that the sneakers-to-soccer balls behemoth was in the early stages of a turnaround under new chief executive Elliot Hill, though we did also warn this transformation could prove more of a marathon than a sprint.

WHAT HAS HAPPENED SINCE WE SAID TO BUY?

Shortly after we recommended the stock, Nike warned fourth-quarter revenue would fall by a steeper-than-expected amount, then the shares gapped down in April after Donald Trump announced sweeping tariffs on nations including Vietnam, where the company makes over half its shoes.

Encouragingly, however, the shares rallied following the delivery of better-than-feared fourth-quarter sales and earnings (26 June) to leave our Buy call 10.5% in the red, and the results suggest the trainers-to-basketballs business is over the worst and Hill’s turnaround initiatives are gaining traction.

Admittedly, Wall Street expectations were low coming into the print yet Nike still delivered forecast-beating revenue of $11.1 billion for the quarter ended 31 May 2025.

That was down 12% year-on-year but ahead of the $10.7 billion consensus estimate, while earnings per share of 14 cents topped the 13 cents analysts were predicting.

Nike quantified a $1 billion cost headwind from tariffs, with a meaningful chunk of its existing supply chain based in China, but the company is taking steps to move its Chinese production elsewhere as Nike lifer Hill tackles the company’s problems head-on.

WHAT SHOULD INVESTORS DO NOW?

Patient investors who bought on our advice should hold on as the company appears to have reached an inflection point.

The Oregon-based behemoth expects sales and profit declines to moderate moving forward, is working down elevated inventory levels, especially within classic franchises, and wholesale partners are responding well with holiday order books up year-on-year.

Jefferies, which has a ‘Buy’ rating and $115 price target for Nike, notes its running products are ‘showing green shoots, and wholesale partnerships are being re-established (Amazon) and improved’.

The broker also stresses Nike’s valuation is its cheapest for 10 years and still sees ‘a V-shaped recovery in full-year 2027 as innovation resonates and margins rebound’. 

‹ Previous2025-07-03Next ›