BofA Bets On Nike Rebound, Says Q4 Pain Could Lead To 2026 Gain

BofA Securities reiterated a Buy rating on Nike (NKE) with an $80 price target ahead of its Q4 fiscal 2025 earnings release on June 26, anticipating a focus on fiscal 2026 outlook. While Q4 is expected to show peak sales and margin pressure due to inventory clearing, the analyst highlights growing retailer enthusiasm for Nike's Spring '26 product innovation; however, the FY26 EPS estimate was lowered to $1.80 from $2.00 due to FX headwinds and China softness, though early signs of wholesale stabilization are emerging outside of China.

Analysis

BofA Securities reiterates a Buy rating on Nike, Inc. (NKE) with an $80 price target, anticipating the fourth quarter of fiscal 2025, with results scheduled for June 26, to represent a "peak" in sales and margin pressure due to aggressive inventory clearance efforts. While the consensus Q4 EPS estimate of 12 cents is maintained, the primary focus for investors will be the fiscal 2026 outlook. There is growing retailer enthusiasm for Nike’s Spring ’26 product innovation pipeline, which is seen as a crucial growth catalyst. However, the analyst has revised the FY26 EPS estimate downward to $1.80 from $2.00, citing adverse foreign exchange movements and persistent softness in the Chinese market, though the FY27 EPS estimate remains unchanged at $3.00. Nike is expected to detail the impact of current tariffs, with the analyst confident in the company's ability to manage these through its negotiating leverage and pricing power, demonstrated by targeted price increases on higher-value footwear and adult apparel while preserving accessibility for kids’ products and items under $100. The shift to quarterly guidance underscores ongoing visibility challenges, and management will need to provide clarity on inventory normalization timelines and the expected sales rebound. Early signs of stabilization are emerging in the wholesale business, as Fall ’25 order books outside China are only modestly lower, with strength in performance categories nearly offsetting weakness in classic footwear. NKE shares were trading at $61.86, down 1.50%, at the time of the report.

Key Decisions for Investors

• Investors should closely scrutinize Nike's upcoming Q4 earnings call for detailed fiscal 2026 guidance, specific timelines for inventory clearance, and articulated strategies to counteract foreign exchange headwinds and challenges in the Chinese market.
• The reiterated Buy rating and $80 price target imply significant potential upside from the current $61.86 share price, contingent upon successful execution of the Spring '26 product innovation and effective navigation of the fluid wholesale landscape.
• Consider the current valuation as potentially reflecting peak near-term pressures, while assessing Nike's capacity to leverage its brand strength for strategic pricing and to manage tariff impacts as critical factors for future performance.