Nike Inc (NYSE:NKE) shares are trading higher on Wednesday. The company received multiple analyst ratings, including a fresh Buy rating from Guggenheim and an earnings preview from Telsey Advisory Group ahead of next week's fiscal second‑quarter results.
What To Know: Guggenheim analyst Simeon Siegel initiated coverage on Nike with a Buy rating and a $77 price target. Meanwhile, Telsey Advisory Group analyst Cristina Fernandez maintained a Market Perform rating with a $75 price target, while highlighting key factors investors should watch when Nike reports earnings on Thursday, Dec. 18, after the close.
Fernandez expects Nike to present a balanced message, acknowledging early progress in its turnaround efforts but also emphasizing the significant work still needed to restore profitable, sustainable growth across its four geographic regions. Telsey's focus is on strategic actions that could help Nike return to sales growth in the second half of fiscal 2026 and into fiscal 2027.
For fiscal second-quarter 2026, Telsey projects sales will decline 1.8% to $12.13 billion, slightly below FactSet consensus of a 1.2% drop to $12.20 billion. In constant currency, the firm sees a 2.6% decline, with Asia Pacific down 1%, EMEA down 1%, North America down 2% and China down 7%.
On profitability, Telsey anticipates gross margin pressure of 300 basis points year‑over‑year to 40.6%, driven by liquidation activity and tariff impacts of 175 basis points. SG&A expenses are expected to deleverage 250 basis points to 34.9% of sales due to marketing investments, including the NikeSKIMS launch, leading to operating margin contraction of 550 basis points to 5.7%. Telsey's EPS estimate stands at 36 cents, just below consensus at 37 cents.
Feedback from U.S. retailers on Nike's new running products has been broadly positive, and store traffic appeared stronger year‑over‑year during the Black Friday weekend, offering some encouragement.
Still, near‑term margin headwinds remain. Nike continues to rationalize inventory, reducing Dunk units in China, Asia Pacific and Latin America and EMEA, as well as at Converse. Digital traffic declines and tariff costs, estimated at roughly $1.5 billion in fiscal 2026, add further pressure.
NKE Price Action: Nike shares were up 4.17% at $65.96 at the time of publication on Wednesday, according to Benzinga Pro.
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