Nike Inc (NYSE:NKE, XETRA:NKE) has earned a repeat ‘Buy’ rating from Bank of America analysts ahead of its third quarter earnings report, with the firm expecting the company’s North American business to show continued progress even amid global headwinds.
The analysts noted “continued progress in NA gives us increased confidence in Nike's turnaround potential globally,” even as challenges persist in China and gross margin pressures mount.
The analysts expect total third-quarter sales to fall slightly, projecting a 0.4% decline, which includes a 300 basis point benefit from foreign exchange.
China is expected to remain pressured, with sales down 16% and operating margin falling 500 basis points. “China was the big surprise last quarter, but a tough H2 is now embedded in expectations,” Bank of America noted.
Gross margin is also a key focus, with the brokerage modeling a 200 basis point decline in 3Q, including a 315 basis point tariff impact.
Bank of America believes that Nike is likely to issue Q4 guidance, but its fiscal year 2027 outlook “will have to wait until June.”
They added that there is “potential for Q4 gross margin stability as tariff mitigation ramps,” as Nike has started importing products at a lower 10% tariff rate following the IEEPA ruling.
On the product front, Nike has begun rolling out its 2026 World Cup fan and performance apparel, featuring Aero‑FIT, a new performance fabric made entirely from textile waste. Analysts expect this launch to bolster Q4 and early fiscal 2027 sales.
The firm has a $73 price target on Nike, above current levels of $53.
Nike will report its Q3 earnings on March 31.