NIKE (NKE) Stock Forecast & Price Target

Nike's second-quarter operating expenses (OpEx) increased approximately 1% year-over-year, with a notable 13% rise in Demand Creation expenses linked to marketing efforts, while constant currency sales grew around 6%, signaling a positive trend in sales performance. The NIKE Brand reported a revenue increase of 1% year-over-year, with a significant boost in running footwear, which experienced over 20% growth for the second consecutive quarter, and North America showing a 9% growth in revenue, strengthening the outlook for the region following a period of decline. Forecasts for fiscal year 2027 indicate expectations for modest sales growth and improved margins, with an anticipated earnings per share (EPS) increase of 20%-25%, highlighting the effectiveness of management's turnaround initiatives and the potential for sustainable revenue growth.

Nike is experiencing significant financial challenges, highlighted by a more than 20% year-over-year decline in revenue for the second quarter, amounting to approximately $550 million, with management forecasting a low single-digit percent revenue decline for the third quarter, which falls short of market expectations. The company's gross margin has contracted considerably, showing a decrease of 300 basis points to 40.6%, driven by various factors including tariff impacts and aggressive promotional activity that led to higher markdowns and increased obsolescence costs. Additionally, Nike's market share erosion in key regions and categories, particularly in North America and Greater China, exacerbates revenue declines and amplifies margin pressures, raising concerns about its competitive position amid rising competition.