TLDR
- JPMorgan analyst Matt Boss raised his Nike price target to $100 from $93 and upgraded the stock to Buy, citing the company’s new merchandising team working with retail partners
- Nike’s Q1 fiscal 2026 revenue grew 1% to $11.7 billion, beating expectations, with North America sales up 4% and wholesale revenue rising 7%
- Earnings per share dropped 30% year over year as the company cleared old inventory through discounts, hurting profit margins
- New U.S. tariffs are expected to add $1.5 billion in costs for Nike this fiscal year
- The company projects Q2 revenue to decline in low single digits despite recent improvements
JPMorgan retail analyst Matt Boss raised his price target on Nike to $100 from $93. He upgraded the stock to Buy when shares were trading lower.
Boss pointed to a major operational shift at Nike that caught his attention. In September, the company deployed new merchandising teams to work directly with retail partners. These teams are assessing inventory opportunities and product development at each partner location.
This represents a reversal from Nike’s recent strategy. Over the past few years, the company focused more on profitability and direct-to-consumer sales. That approach ended up alienating important wholesale partners.
Boss believes Nike is now working to reclaim lost shelf space. He noted this kind of hands-on retail engagement should have been standard practice all along.
The analyst’s valuation argument is straightforward. At 12% to 13% profit margins, Nike has earnings power of more than $4 per share. The stock currently trades nine turns below its valuation before the company’s recent struggles began.
Nike reported fiscal 2026 first quarter results on September 30. Revenue increased 1% year over year to $11.7 billion. The figure beat Wall Street estimates.
North America sales provided a bright spot with 4% growth. The wholesale segment delivered 7% revenue growth. Nike Running sales jumped 20% as the brand worked to win back market share from competitors.
Recent Financial Performance
Earnings per share fell 30% compared to the same quarter last year. The decline stems from Nike’s efforts to clear older inventory through discounting. Heavy promotions have compressed profit margins.
New U.S. tariffs create another challenge. The company expects these duties to increase costs by $1.5 billion this fiscal year.
CFO Matt Friend offered guidance during the earnings call. He said the company expects second quarter revenue to decline in low single digits.
Some fund managers have lost patience with Nike’s turnaround timeline. Sands Capital Global Growth Strategy sold its Nike position in the second quarter. The firm cited market saturation and operational challenges.
Sands Capital specifically criticized Nike’s pandemic-era shift toward direct sales. This strategy came at the expense of wholesale relationships and product innovation. The firm concluded they gave the company too much time to recover from these self-inflicted problems.
Valuation Considerations
The stock has dropped 43% over the past five years as of early October. Shares now trade 59% below the record high set in November 2021.
The current price-to-earnings ratio sits at 36.9. This figure looks expensive given the company’s challenges. However, that metric may not tell the complete story.
If Nike’s net profit margin matched its 10-year average of 10%, the company would generate roughly $3.12 in earnings per share. Using that normalized figure produces a P/E ratio of 23.
Interest rate cuts from the Federal Reserve could help consumer spending. This might provide a tailwind for the upcoming holiday shopping season.
Nike Running’s 20% sales growth shows the brand can still compete when it executes well. The wholesale channel’s 7% revenue increase demonstrates retail partners remain willing to stock Nike products.
Boss emphasized that Nike’s 12% to 13% margin profile supports sustainable revenue growth going forward. The company retains strong brand recognition and relationships with major sports leagues and athletes.
