Nike Inc (NYSE:NKE, ETR:NKE) shares are trading at near-decade lows, but Jefferies analysts are urging investors to look beyond the upcoming fourth quarter earnings pain and “just buy it.”
The analysts repeated their ‘Buy’ rating on Nike with a price target of $115, representing upside of nearly 90% from current levels, and declared that the company has reached its fundamental trough.
“We're seeing progress on inventory cleanup, innovation, and wholesale partnerships, our key focus areas,” the analysts wrote. “With that, our call for a V-shaped rebound in fiscal 2027 stands.”
Nike’s fourth quarter earnings will be “painful,” the analysts noted, as the company continues its aggressive efforts to rebalance inventory and reset its marketplace strategy.
“Last quarter, management threw out the kitchen sink, guiding revenue down in the teens and gross margin down 400 to 500 basis points, as Nike works through excess inventory,” the analysts wrote.
Jefferies forecasts earnings before interest and taxes (EBIT) margins to contract by approximately 1,050 basis points and earnings per share (EPS) to plunge 85% year-over-year in the quarter, citing elevated brand marketing spend and product mix challenges. However, the firm maintains that the soft outlook is already priced in.
Jefferies’ bullish case for Nike rests on what it sees as meaningful progress across several critical fronts that signal a turning point for the brand.
First, foot traffic trends have started to accelerate, a clear sign that Nike’s efforts to clear out excess inventory through its factory stores are beginning to work.
According to Jefferies, foot traffic rose steadily over the past three months, up 0.5% in March, 2.7% in April, and 4.1% in May, which the firm sees as evidence that consumer engagement is recovering.
On the product side, innovation is starting to gain traction, particularly in Nike’s core running category. Newer styles like the Vomero and Pegasus are showing early momentum, with the Pegasus ranking highest in average monthly search volume over the past year.
Jefferies also highlighted that Nike continues to hire aggressively in product-related roles, suggesting the company is doubling down on innovation as a growth engine.
Meanwhile, Nike’s approach to inventory appears to be paying off. Unlike many peers still grappling with bloated stock levels, Nike reported a 2% inventory decline last quarter. The analysts believe this discipline is allowing Nike to make room for “newness,” particularly as it expands its running offerings and resets product cycles.
Nike is also regaining traction with wholesale partners. Jefferies points to a stronger relationship with Dick’s Sporting Goods and views the pending Dick’s–Foot Locker deal as a positive development. Academy Sports has called out Nike as a key growth driver, and the brand’s return to Amazon further broadens its reach and supports the ongoing wholesale reset.
Finally, Jefferies underscored Nike’s leadership refresh as a positive signal. With Amy Montagne taking over as president of the Nike brand and new appointments to key innovation and communications roles, the firm sees Nike’s “Win Now” strategy taking shape with a strong, experienced bench in place to lead the next phase of growth.
The analysts concluded: “Bottom in… time to buy the swoosh.”