'Sleeping bear wakes up': Jefferies advises buying Nike stock ahead of report

After a long decline Nike seems to be preparing for a spurt, analysts at Jefferies believe. They advise to buy the company's shares before the report and predict the growth of the sportswear manufacturer's securities by 65%.

Just BUY It, Jefferies analysts wrote about Nike shares. On Monday, the investment bank reiterated a "buy" recommendation and a $115 target on the sportswear maker's shares. That's about 65% above the closing price on Sept. 29. The investment bank has maintained expectations on the stock since February.

Nike will release its first quarter fiscal 2026 report after the close of major trading on Sept. 30. Jefferies believes the report "should signal a reversal - the sleeping bear is awakening." That's a bold prediction for a company whose stock has declined for two years in a row due to an outdated lineup and inventory overstocking, Quartz notes. The stock is down about 22% over the past year.

Nike shares rose 0.4 percent to $69.6 in Monday trading.

Jefferies expects the company to be "moderately ahead of guidance" in the short term. The market consensus for the quarter is $0.27 earnings per share on revenue of about $11 billion - a sharp year-over-year decline, Quartz notes. Jefferies' forecast is slightly higher: $0.29 earnings on revenue down 4%. At the same time, the investment bank recognizes that pressure on margins will remain: gross margins will decline by about 350 bps, operating margins by 600 bps. This is due to the continued cost of selling off classic footwear models and discounting. However, according to Jefferies analysts, it is in the first quarter that the company is starting to show a turnaround from the weakest levels of fundamentals.

Jefferies notes that in August traffic in Nike stores became positive for the first time - the brand became the only one in the sample of Jefferies investment bank that showed growth. In addition, interest in Nike and Jordan brand products is growing, with more consumers considering buying them. In the first quarter of fiscal 2026, Nike's marketing spend grew 9% to $1.63 billion, and the company is gearing up for a busy 2026, including the FIFA World Cup, where many national teams will be sporting Nike uniforms.

Nike's product innovations have become visible in the market. Sales of the Vomero 18 running shoe have already crossed $100 million, and the Pegasus model remains one of the most popular in the running segment. Nike's joint collection with Kim Kardashian's SKIMS brand, launched last week, has received mixed reviews but reflects Nike's determination to strengthen its position in women's sportswear, especially as the retailer has already lost share to rivals Lululemon and Athleta, Investment Bank wrote.

Last quarter, the company finally recorded stabilization of inventory balances, Jefferies notes. The new report, according to analysts, will show further progress. Jefferies expects that by the second half of the year, stores will be "cleared" of outdated assortment, which means fewer sales, fresher merchandise and better price control for the holiday season.

Longer term, Jefferies expects a V-shaped recovery for Nike stock in fiscal 2027.

UBS in mid-September raised the target on Nike shares from $63 to $71, maintaining a neutral assessment. The bank pointed to a balanced outlook: in its opinion, Nike manages to contain the pressure of duties and at the same time improve the range of products through new models. Telsey Advisory Group at the same time raised its target price on Nike shares from $70 to $75, maintaining a "buy" recommendation. Analysts noted improved momentum in the running shoe category and expect revenue recovery in the second half of the fiscal year. RBC raised its rating on Nike shares from Hold (Hold recommendation) to Buy (Buy recommendation) and raised its target price from $76 to $90.

In total, according to MarketWatch, of the 38 analysts tracking the athletic apparel and footwear maker's securities, 20 recommend buying, 16 recommend holding, and 2 recommend selling. The consensus target price is $80.6 per share, which is about 16% above their current value.

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