Optimism is growing on Wall Street about Nike. Should we wait for a stock reversal?

KeyBanc recommended buying shares of sportswear maker Nike and expects them to grow by 21%. In addition to him, several other analysts raised their target on the stock, which has fallen in price two years in a row due to a lack of innovation in models and stockpiling of irrelevant collections. The Wall Street revisions followed the release of quarterly earnings, in which Nike beat analysts' expectations on earnings and revenue.

KeyBanc analyst Ashley Owens upgraded Nike's stock from Neutral to Overweight, which equates to a Buy recommendation. She also set the target price at $90, more than 21% above the previous close price.

The bank upgraded its rating on Nike following the release of its report for the first quarter of fiscal 2026, which ended Aug. 31. The company unexpectedly reported a 1 percent increase in sales, even though it had previously forecast a year-over-year revenue decline of several percent. Revenue for the quarter was $11.7 billion, while Wall Street was expecting $11 billion, according to LSEG. Earnings per share came in at $0.49, while analysts had forecast $0.27.

After the release of the report on September 30, Nike shares rose more than 6%, hitting their highest level since the end of August. Over the past year, the securities have fallen in price by almost 10%.

Although the company has warned of possible weak sales for the upcoming holiday season, Owens believes Nike is preparing for a "sustained recovery" after several challenging years.

"While near-term volatility remains due to duties, weakness in digital channels and falling sales in China, we believe the company's new strategy, innovative product pipeline and distribution relaunch continue to strengthen Nike's position for sustainable growth and margin recovery," the analyst wrote in a note cited by CNBC.

According to Owens, sales of Nike running sneakers are showing "continued progress" - they grew more than 20 percent in the quarter. Most notably, the restructuring of the product line will allow the company to release one new running shoe model each season, the analyst notes.

A number of other Wall Street analysts have revised their target prices on the sportswear maker's shares after the reports were released.

- Morgan Stanley raised its target on Nike shares from $70 to $72, maintaining a neutral rating, Investing.com writes. The investment bank called the data from the report a sign of "significant progress in the recovery" and noted that the company's management has demonstrated control over key metrics. Despite the target price upgrade, Morgan Stanley analysts are skeptical of Nike's ability to return to previous growth rates and profitability levels - growth in the mid to high single digits (5-9%) and margins of around 13% over the medium to long term.

- JPMorgan raised its target price on shares of Nike from $93 to $100, maintaining an "Outperform" rating. The investment bank noted signs of recovery in key sales channels and reduced pressure from excess inventory. JPMorgan analysts raised Nike's fiscal 2026 earnings per share forecast to $1.42 from $1.32, with an operating margin of 5.6%. For 2027, the bank forecasts EPS of $2.24, assuming revenue growth of 5% and an operating margin of 8.5%.

- UBS even before the publication of the report, on September 19, raised the target on Nike shares from $63 to $71, and on October 1 confirmed the target price. At the same time the bank kept neutral assessment. UBS raised its fiscal 2026 earnings per share forecast for Nike by 10% to $1.55, attributing the revision to improved sales expectations, particularly in North America, Europe, the Middle East and Africa. However, despite the more optimistic revenue outlook, analysts pointed to two offsetting factors: a more cautious gross margin outlook in the second half of the year due to the strong impact of duties and unfavorable changes in sales channels and product mix, and an increase in the expected tax rate.

- Piper Sandler raised its target price on Nike shares to $84 from $80, maintaining an "Outperform" rating on the stock. The investment bank noted that Nike's sales rose 1% in the first quarter of fiscal 2026, a turnaround that came two quarters ahead of forecasts.

According to MarketWatch, of the 38 analysts tracking the athletic apparel maker's stock, 21 of them recommend buying, 15 recommend holding, and only two recommend selling. The Wall Street consensus price target is nearly $82, down 10.5% from Wednesday's closing price.

This article was AI-translated and verified by a human editor