Nike Beats The Street And Says The Worst Is Over

Shares of Nike Inc. NKE rallied during Friday’s trading session after the company reported upbeat fiscal fourth-quarter results on Thursday.

The announcement came amid an exciting earnings season. Here are some key analyst takeaways.

BofA Securities On Nike

Analyst Lorraine Hutchinson reiterated a Buy rating, while raising the price target from $80 to $84.

Nike's sales are poised to improve, and the company could return to growth in the back half of the year, Hutchinson said in a note. Management indicated that Nike witnessed the "worst sales and margin pressure from its turnaround strategy" in the fourth quarter, she added.

The company guided to a gross margin contraction in the fiscal first quarter, which reflects "tariff headwind, ongoing DTC clearance and product and channel mix headwinds," the analyst wrote. Gross margins could improve in the second quarter and there is "upside to our estimates as Nike laps significant promos in both DTC and wholesale with new innovation," she further stated.

Goldman Sachs On Nike

Analyst Brooke Roach maintained a Buy rating, while lifting the price target from $72 to $81.

Nike reported an earnings beat for the latest quarter and provided "better-than-feared forward commentary against a backdrop of low investor expectations," Roach said.

The company continues to face strong earnings pressure and its recovery could take time, especially in China, the analyst stated. She added, however, that management believes that the worst is over and indicated "several greenshoots within its performance portfolio."

Check out other analyst stock ratings.

Needham On Nike

Analyst Tom Nikic reaffirmed a Buy rating, while raising the price target from $56 to $78.

Nike's fourth-quarter results were better than feared, and gave hope that the worst was over, Nikic said. The company is now re-focusing on performance products to drive improvement, he added.

Nike has also recognized the importance of its key wholesale partners, the analyst stated. While margins continue to be under pressure, this is expected to moderate in the back half of the year, he further mentioned.

Telsey Advisory Group On Nike

Analyst Cristina Fernández reaffirmed a Market Perform rating and price target of $70.

Nike’s quarterly results had "several encouraging data points," Fernández said. The company reported sales and earnings ahead of expectations, while the gross margin contraction was as anticipated, she added.

The running category, where Nike has innovated the most, grew by high single digits globally, the analyst stated. "Nike noted its wholesale order book is positive for the holiday season, partially due to door expansion," she further wrote.

NKE Price Action: Shares of Nike were up 15.5% to $72.24 at the time of publication on Friday.

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