Nike Stock (NYSE:NKE) Soars 15% After Earnings Beat—Is $83.50 in Sight?

NYSE:NKE Soars 15% After Earnings Blowout—Reclaims Momentum at $72

Nike (NYSE:NKE) stunned markets Friday with a dramatic 15.19% surge to $72.04, marking one of its strongest single-day rallies in years and reversing a month-long downtrend. The stock’s explosive move followed a better-than-expected Q4 earnings report that offered a glimmer of optimism amid a still-fragile turnaround narrative. Despite the spike, Nike remains down 5% YTD, sharply lagging the S&P 500’s 4% gain, and is still off more than 37% from 2023 highs, underscoring how much ground the company needs to recover. The Friday rally lifted shares from Thursday’s close of $62.54 to an intraday high of $72.10, triggering renewed analyst attention and retail investor inflows.

Nike’s Q4 FY2025 results showed an 86% net income collapse, with EPS of $0.14, despite $11.1 billion in revenue that beat consensus. While topline figures provided relief, the brutal earnings print keeps pressure on management to execute its FY2026 “Win Now” recovery plan with surgical precision.

Tariff Pressure and Manufacturing Realignment Squeeze Margins

U.S. import tariffs are projected to cost Nike $1 billion over the fiscal year, directly compressing margins. CFO Matthew Friend warned of a 350–425 basis point margin contraction in Q1 FY2026, on top of a 4.4 point decline in gross margin during Q4. To combat this, Nike is aggressively diversifying its sourcing strategy, reducing Chinese dependence: China's share of U.S.-bound footwear fell to 16%, from 29% in 2016, while apparel dropped to 18% from 26%. This structural pivot is designed not just for cost containment but also to de-risk long-term geopolitical exposure.

China Woes Erode Regional Strength Despite Higher EBIT Leverage

Greater China, once a crown jewel, posted a 20% revenue decline YoY, hurting Nike’s overall profitability. Even though the region now contributes only 15% of projected FY26 revenue, it still accounts for a striking 28% of EBIT—illustrating how deeply regional softness affects overall margin leverage. Meanwhile, North America revenue slipped 11%, dragging on Nike’s largest revenue base. The key to recovery hinges on a H2 FY2026 rebound in Chinese demand, which remains uncertain amid lingering macro pressures.

Digital and Direct Weakness vs. Amazon Re-entry Catalyst

Nike Direct sales contracted 14%, digital revenue fell 26%, and physical store sales declined 2%. Wholesale dipped 9%, and overall footwear sales dropped 13% YoY. However, the renewed Amazon partnership has re-energized sentiment. Analysts estimate this channel could generate $885 million in annual incremental revenue, offering a margin-lifting path back to scale. This development aligns with Nike’s “Win Now” initiative to re-establish top-line growth through multi-channel synergy and sport-centered campaigns.

“Win Now” Execution Framework Targets FY2026 Recovery

The turnaround plan zeroes in on five core verticals—running, basketball, football, training, and sportswear—backed by product innovation like the Vomero 18 and Pegasus Premium. CEO Elliott Hill is concentrating brand firepower on the U.S., China, and U.K., with marquee city campaigns in New York, London, and Shanghai. Notably, Nike has eliminated digital promotional days, trimming markdown periods from 30 days to zero YoY—restoring full-price sell-through discipline. Management expects this to support margin stability through FY2026.

Inventory Liquidation Nearing Its Final Phase

Nike has made meaningful progress on inventory normalization. With Q4 likely marking the peak of clearance activity, investors now expect cleaner channels in H2 FY2026. The company’s better-than-expected $11.1 billion in Q4 revenue, though still sharply down YoY, supports the thesis that operational reset is taking hold. If upcoming quarters confirm stabilized sell-in volume, Nike’s EPS trajectory could reflate faster than consensus currently models.

Mixed Analyst Targets Show Market Divide

Wall Street remains split: HSBC upgraded Nike to “Buy” with a $80 target, while BofA set a high mark at $84, banking on footwear recovery and improved supply chain metrics. JPMorgan lowered its target to $64, citing weak U.S. store trends. The valuation spread—from $64 to $84—mirrors differing assumptions about China’s trajectory and the success of Nike’s channel recalibration.

NikeSKIMS Delay and Insider Sentiment

The high-profile NikeSKIMS collab with Kim Kardashian has faced delays, prompting short-term concerns. Yet analysts view the pause as a sign of quality-first execution. Investors should track Nike insider activity for early signals of institutional confidence returning. A well-timed launch of NikeSKIMS in H2 could provide a significant Q4 catalyst if it resonates with Gen-Z and female athletes.

Valuation Models Signal Rebound Toward $83.52

A five-year discounted cash flow model using an 8.1% CAGR, paired with EBITDA recovery forecasts, implies Nike shares could be worth between $82 and $83.52 in 12 months. With $47.8 billion in annual revenue, Nike dwarfs adidas ($26.4 billion) and maintains superior U.S. market penetration. While short-term EPS may remain depressed, longer-term pricing power and product mix shift should support margin expansion.

Verdict: Buy NYSE:NKE at $72, Targeting $83.50

We reiterate a BUY rating on NYSE:NKE at $72, targeting $83.50 over the next 12 months. The investment case rests on inventory normalization, a growing Amazon channel, disciplined markdown strategy, and accelerating product refresh. While China and North America remain key risk zones, valuation compression has created a favorable entry for long-term investors with a high-conviction horizon into FY2026.

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