Analysts at Jefferies have named Nike the top pick in the sportswear manufacturer sector for 2026. "Winners" of the sector, according to analysts, next year will be companies with effective inventory management and flexible supply chains. Nike meets these criteria as the brand is actively reducing excess inventory and addressing trade duty concerns, CNBC reported.
Details
Jefferies' positive assessment of Nike follows the sports retailer's release of its quarterly report last week. In it, Nike exceeded profit forecasts but warned of lower sales in China.
Even so, popular financier and CNBC anchor Jim Cramer joined Joeeries' positive outlook on Nike. "While Nike's Chinese market is a big challenge right now, I like where the company's underlying trends are heading," he noted on CNBC's Dec. 19 broadcast. - Nike's North American market, for example, is on its way to more sustainable profit growth," he added.
Context
On Dec. 19, Nike reported a 17% drop in revenue in China for the second quarter of fiscal 2026, and due to pressure from increased duties, the company's gross margin declined by 3 percentage points during the same time, while inventories fell by 3%. For the current quarter, Nike expects revenue to decline by a "low single-digit percentage" (roughly 1-3%). In North America, the manufacturer expects a moderate growth, according to indicators in China will be in line with the level of the last quarter, the company representatives pointed out.
However, despite the setback in China, Nike had an overall strong quarter. Revenue in the second quarter of fiscal 2026 grew 1% year-over-year to $12.43 billion versus analysts' forecast of $12.22 billion. Adjusted EPS came in at $0.53 versus expectations of $0.38.
The company hasn't released its full-year guidance in several quarters, citing the ongoing business turnaround and high uncertainty, management's comments on the report suggest. During a call with investors after the report's release, Nike management reminded them that the retailer is "only in the midst of a comeback," and progress is non-linear, meaning some quarters will prove stronger than others as new initiatives take effect. However, investors were disappointed that the recovery is taking longer than they had hoped.
What about the stock
In trading on December 22, shares of Nike fell by 2.5%, on the premarket Tuesday, December 23, the fall continued, the securities lost another 0.02%.
Following Nike's Dec. 19 report, Jefferies analyst Randal Konik gave a positive assessment of the company's results. According to him, Jefferies "confirms that the turnaround [of Nike's business] is gaining momentum". The analyst reiterated a buy recommendation on Nike stock with a target price of $110, suggesting a potential upside of nearly 93% relative to the last close. That's one of the most optimistic targets on Wall Street, MarketWatch shows .
According to MarketWatch, most analysts tracking the sportswear maker's securities advise buying them: Nike has 25 Buy and Overweight ratings out of 38 combined. Another 11 analysts recommend keeping the securities in the portfolio, and only two suggest selling.
This article was AI-translated and verified by a human editor
