BofA Securities analyst Lorraine Hutchinson reiterated a Buy rating on the shares of Nike Inc (NYSE:NKE) on Friday and lowered the price forecast from $90.00 to $80.00.

Nike shares have lagged behind the S&P 500 since the April 2 tariff news, falling 12% compared to the index's 5% decline.

Despite this, analysts believe the current tariff exposure remains controllable, and reduced consumer interest in American labels within China has already been factored into the stock.

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The price forecast cut reflects a lower F2027 P/E multiple of 27x versus 30x previously due to overall market valuation shifts.

The analyst expects that inventory streamlining through the first half of FY26 will position Nike to accelerate product innovation and eventually boost revenue growth.

Nike maintains a well-spread manufacturing base, with its footwear production split mainly among Vietnam (50%), Indonesia (27%), and China (18%). Apparel manufacturing follows a similar pattern, followed by Vietnam at 28%, China at 16%, and Cambodia at 15%.

Notably, most goods produced in China are sold domestically, minimizing U.S.-bound exports. If 5% of Nike's U.S. imports face a 145% tariff and the rest of the world sees a 10% rate, the average global tariff would settle around 16.75%.

In this scenario, margins would compress by approximately 110 basis points if no countermeasures are taken. However, Nike could neutralize the impact with a modest 2% global price increase.

Should tariffs revert to those proposed on "Liberation Day," the blended rate could jump to 45%, potentially trimming margins by 300 basis points. The analyst noted that a 6% price bump worldwide would be required to offset the damage.

Chinese consumer backlash against Nike intensified in May 2021 after the U.S. banned cotton imports linked to Xinjiang, causing Nike's growth in China to fall sharply from 38% to as low as -5% over the following quarters.

Although China now accounts for a smaller share of Nike's projected FY26 sales and profits than it did before the pandemic, the region remains critical.

Analysts project a continued downturn in Nike's China performance through the first half of FY26, following weaker margins and sales in FY25. While a rebound is anticipated in the second half, that outlook may be too hopeful if U.S.-China tensions persist.

Price Action: NKE shares traded lower by 1.90% at $57.37 at the last check on Friday.

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