Barclays upgrades Nike to overweight, says ‘worst may be behind’

Barclays believes that Nike management is doing a good job in righting the ship. The bank upgraded the athleisure stock to an overweight rating from equal weight, and analyst Adrienne Yih lifted her 12-month price target to $73 from $64. Shares of Nike are down 12% this year and off 24% over the past 12 months. Yih’s new price forecast implies potential upside of some 30% in the stock from current prices. NKE 1Y mountain NKE 1Y chart “We are upgrading NKE to OW, focusing on recent operational progress, financial inflections and management’s disciplined actions,” the analyst wrote. “While acknowledging ongoing risks, we believe the risk/reward profile has shifted favorably, making NKE an attractive tactical investment opportunity at this stage.” Remaining risks Yih acknowledged that risks remain, specifically tariffs, geopolitical tensions and uncertain demand. But Nike’s early financial indications and management actions indicate that “the worst may be behind it,” she said. “Nike’s recent progress in inventory management, operational resets, and strategic focus on brand health and margin stabilization provide a solid foundation for a more constructive investment thesis,” she wrote. “For investors with a long-term horizon, NKE offers an attractive risk/reward profile as it moves closer to a fundamental bottom and positions itself for renewed growth.” Nike stock is suffering from investors’ “peak skepticism,” despite evidence that Nike’s North America reset — the brand’s largest region — is progressing largely as planned. “Such doubt on a turnaround, in our view, fails to adequately reflect tangible operational improvements already visible in North America (such as a return to double-digit growth in running and sales growing faster than inventory), yet overemphasizes the largely known and ongoing reset risks in China and certain parts of [Asia Pacific & Latin America], as well as our view of a false narrative of wholesale channel ‘stuffing’ (which we see as a normal restocking cycle),” she wrote.