Banking giant sets Nike stock price target after earnings

Core Viewpoint - HSBC has upgraded Nike's stock rating to 'Buy' from 'Hold' and increased the price target to $80 from $60, citing evidence of sales recovery and margin improvement [1] Group 1: Upgrade Factors - The new management team under CEO Elliott Hill is focusing on quality over quick fixes, which is expected to benefit Nike in the long term [2] - The repositioning of the digital channel as a full-price channel is highlighted as a positive change [2] - After two quarters of inventory clean-up, the brand assortment is expected to be current and exciting, despite challenges with the Dunk line [2] Group 2: Financial Performance - Nike's stock surged 12% in after-hours trading following the earnings call, despite mixed results [3] - The company reported earnings per share of 14 cents, slightly above estimates, while sales declined 12% to $11.1 billion [3] - Net income fell 86% to $211 million from $1.5 billion in the previous year [3] Group 3: Challenges and Outlook - Nike faces headwinds from new tariffs on Chinese goods, expecting a $1 billion impact in fiscal 2026 [4] - Currently, 16% of Nike's supply chain runs through China, with plans to reduce this to high single digits by next summer as part of the 'Win Now' strategy [4] - HSBC's price target of $80 indicates a 28% upside from Nike's current trading price of $62.54, despite a year-to-date decline of 17.35% prior to the recent rally [4]