Key Takeaways
- Bank of America cut its Nike target to $24 on Oct. 2, keeping its Underperform rating, the same day BTIG cut its Buy-rated target to $50. Barclays raised its target to $45 on Oct. 22, and Bernstein reiterated its $45 Outperform call on Nov. 3.
- Nike’s gross margin rose 60 basis points to 42.8% in the quarter to Aug. 31. It’s the first year-on-year gain in seven quarters that didn’t come from a tariff recovery.
- BTIG and Bank of America are just 15 cents apart on fiscal 2028 EPS. The gap is the multiple: about 30x for BTIG, 16x for Bank of America.
- The quarter backs the Buy side, but at 30x forward earnings with revenue still falling, Nike needs its Dec. 17 report to show the margin rising again.
On Oct. 2, the day after its first-quarter report, two Wall Street firms looked at the same Nike (NKE) quarter and ended up $26 a share apart. BTIG cut its target to $50 from $55 and kept its Buy rating, while Bank of America cut its target to $24 from $30 and kept its Underperform rating. Both firms reaffirmed those targets the week of Oct. 19, when Barclays raised its target to $45 from $37 and kept its Overweight rating.
The stock is up 13.6% in the past month and still down 38% in 2026.
Bank of America’s own math says the gap is less about earnings than about the multiple. For me, gross margin is the best test of which multiple Nike deserves, and it just turned.
Bank of America’s $24 Is a Multiple Call
Analysts expect Nike’s normalized EPS to fall again in fiscal 2027 (the year to May 2027), then rise in fiscal 2028:
Even that rebound only gets Nike back to about fiscal 2026’s $1.58, and to less than half of fiscal 2024’s $3.95.
Bank of America’s $24 is 16 times its own fiscal 2028 earnings estimate, according to TheStreet, which works out to about $1.50 a share. BTIG’s $50 is about 30x its fiscal 2028 estimate of $1.65. Those two estimates sit on either side of the $1.56 consensus, just 15 cents apart. The real split is the multiple: BTIG will pay nearly twice as much as Bank of America for about the same recovery.
Nike guides fiscal 2027 revenue down by a high-single-digit percentage, so margins have to drive that recovery. Analysts see Nike’s EBIT margin rising from 5.7% in fiscal 2027 to 7.0% in fiscal 2028.
TIKR Tracks 43 Analysts on Nike. How Many Say “Buy”?
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Nike’s Margin Finally Turned
Nike’s gross margin fell year on year for six straight quarters through February 2026. The quarter to May rose only on paper, and the quarter to August is the first real break in that run:
(Nike reported 49.2% for the quarter to May, but about 900 basis points of that came from a $986 million expected recovery of IEEPA tariffs. Without it, the margin was about 40.2%, still under the prior year’s 40.3%.)
In the quarter to Aug. 31, gross margin was 42.8%, up from 42.2% a year earlier, and Nike disclosed no tariff recovery in it. Lower warehousing and logistics costs added about 90 basis points. That’s what Nike promised in June, when it guided first-quarter gross margin to be slightly positive.
That’s the turn Bank of America’s 16x won’t pay for yet, and it has a point: this is one quarter, and management isn’t promising more. On its first-quarter call, Nike said it doesn’t plan to guide gross margin for the year. It also said its fiscal 2027 outlook includes continued pressure on gross margin: sourcing changes are helping, but the discounts it’s offering to reset the marketplace are hurting.
Revenue Still Has to Come Back
Those discounts are part of a bigger problem: Nike is still shrinking. Revenue fell 5% currency-neutral in the quarter, to $11.2 billion. Greater China’s revenue fell 26% on the same basis, and its EBIT fell 34%. Sportswear, just under half of first-quarter sales, fell at a low-double-digit rate, and Jordan, 13% of sales, fell in the mid-teens.
North America is the bright spot: revenue there rose 2%, and North America wholesale rose 9%. That growth cuts both ways for the margin. Nike credited the gain mainly to lower warehousing and logistics costs, but said discounts and channel mix worked against it. Across the Nike Brand, lower footwear prices per pair cut revenue by about 1 percentage point, mostly on channel mix and discounts.
So the margin can hold steady while earnings stay near the bottom. Nike’s own fiscal 2027 adjusted EPS guidance of $1.15-$1.35 sits below fiscal 2026’s $1.58, which excludes the tariff refund.
Nike’s Bulls Have the Better Quarter
On today’s earnings, the stock isn’t cheap:
At 30x on Nov. 3, close to its five-year average of 31x, the price already counts on analysts’ recovery.
The quarter backs the Buy side. Getting to $24 means paying 16x fiscal 2028 earnings, about half what BTIG pays, at the exact moment gross margin has turned up without help from a tariff recovery. Still, I’d want to see a second quarter of rising margin before paying up for $50. At 30x fiscal 2028 earnings, there’s not much room for a slip.
Nike’s Investor Day on Nov. 16 and 17, where management has said it will lay out a financial algorithm for the next five years, and its second-quarter report, expected on Dec. 17, will show us whether the margin keeps rising. China is what could swamp it: a region already down 26% can fall further, and a 60-basis-point margin gain doesn’t go far against that.
So what is Nike stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
