RBC advised buying Nike shares. Why does he expect them to grow by another quarter?

RBC advised to buy Nike shares ahead of the company's quarterly report: it expects the quotes to grow by another quarter. The investment bank believes that the worst of Nike's revenue problems is over and that it will now recover faster than Wall Street expects. RBC's optimism is attributed, for example, to new products, the FIFA World Cup and a restructuring at the company. In addition to RBC, TD Cowen also recommended buying Nike shares this month, but Barclays and Citi are more neutral.

RBC Capital analyst Piral Dadhani raised his rating on Nike stock from Hold to Buy, and raised his target price from $76 to $90, TipRanks reports. Dadhani's new target suggests the company's market value will rise another quarter from its Sept. 18 close.

The expert revised the company's stock valuation ahead of Nike's report for the first quarter of fiscal 2026, which is expected to be published on September 30. RBC expects Nike's sales to start recovering faster than Wall Street forecasts: new products and the World Cup will be the key drivers. He said the company will return to revenue growth as early as the third quarter of fiscal 2026 after a dip in 2025. In this regard, RBC raised its revenue forecast by 2% and EPS by 7%.

Dadhani predicts the World Cup could bring Nike about $1.3 billion in additional revenue as the company will supply uniforms to the U.S., England and Brazil national teams.

Additional drivers of growth will be the renewal of the organizational structure and the release of new products, RBC believes. CEO Elliot Hill is changing the management: this should accelerate and improve the efficiency of decision-making, RBC believes. Nike has also revamped key product lines in 2025, and plans to launch 26 more running sneaker models by the end of 2026 - more than its competitors. A range with clearer separation by purpose and design will allow the company to strengthen its collaboration with retailers and increase its presence on store shelves, which should support sales, Dadhani believes.

Also in Nike's favor is a $4.9 billion marketing budget for fiscal 2026 - nearly double that of Adidas, for example - which will strengthen brand awareness, RBC noted.

"Nike is taking the right steps: improving its offering in the running shoe segment, getting positive feedback from retailers and consumers, and updating its organizational structure, which should support faster and more transparent decisions," Dadhania said in a note cited by CNBC.

In trading on September 18, shares of Nike sagged by 0.3% - to $ 72.1. Since the beginning of the year, the market value of the company has gone down by almost 5%. For comparison: the main U.S. stock index S&P 500 for the same period added about 13%.

In addition to RBC, on Thursday also raised the target price of Nike shares - from $64 to $65 - analyst Barclays. At the same time, he retained the Equal Weight rating ("at market level"), and his target implies a 10% decline in the company's quotes from the closing level on September 18. Barclays expects Nike to beat first-quarter guidance, but duty risks will weigh on the margin outlook.

On September 16, in anticipation of the report, Citi analysts also raised their target on Nike from $68 to $74, up just 2% from the last close. Citi, like Barclays, maintained a neutral rating. The investment bank expects Nike to beat Wall Street forecasts for the past quarter, thanks to stronger sales and lower costs. However, the analyst emphasized that doubts remain as to whether Nike will be able to regain sales growth in its basketball and sportswear segments.

But TD Cowen analyst John Kernan is more optimistic. September 10, he improved the rating of Nike securities from Hold to Buy, and raised the target price by more than a third - up to $85. He noted three factors of recovery: stabilization of margins, more confident management of new management and growing interest in Nike and Jordan brands against the background of weakening competitors. He said the declining appeal of Marks such as New Balance, Adidas, Saucony, Skechers and Asics presents opportunities for Nike. According to TD Cowen, the company is strengthening its position in the basketball and lifestyle segments while maintaining its leadership in the running category and remaining a favorite brand with shoppers of different ages and incomes. Kernan predicts Nike's sales will grow again in the fourth quarter of fiscal 2026 and accelerate to mid-single-digit percentages in 2027.

In total, according to MarketWatch, 37 analysts have assigned ratings to Nike shares and only half of them advise investors to buy securities (19 ratings Buy and Overweight). 16 are neutral with a Hold rating and the remaining two advise selling. The Wall Street consensus price target of $78.5 per share of Nike stock is 8.5% above the closing price on Sept. 17.

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