Nike stock has surged recently but faces challenges, potential opportunity with turnaround efforts

From Nasdaq: 2025-07-01 00:10:00

Nike (NYSE: NKE) stock has surged 20% in the last five days but remains down 5% year-to-date. Fourth-quarter earnings beat expectations, with revenue at $11.1 billion and net income at $211 million. Fiscal 2025 saw total revenue of $46.3 billion, a 10% drop, and net income of $3.2 billion, a 44% decline.

Nike plans to realign its business in fiscal 2026, focusing on key sports categories and streamlining the supply chain. Q1 sales are expected to decline by a mid-single-digit percentage, with gross margin compression. The company aims to offset increased costs from tariffs through pricing and operational efficiencies.

At $72 per share, Nike trades at about 41x projected 2026 earnings, a premium compared to the three-year average. Consensus forecasts expect a 1% revenue decline in FY 2026. The investment case depends on Nike’s turnaround success, with risks of margin pressure and macro conditions.

Nike faces risks in market downturns, with past declines in 2020 and 2022. A 50% decline from current levels could bring the stock to around $35. The company must navigate margin pressure, macro risks, and valuation questions, with execution critical for future success. Consider diversified options for investment risk mitigation.



Read more at Nasdaq: Turnaround in Motion: Is It Time to Buy Nike?