Nike's margins are still bruised and sales are shrinking, but analysts say the Swoosh is finally cleaning up shelves and regaining momentum
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After a long slump, Nike $NKE may be lacing up for a sprint. Ahead of tomorrow’s earnings, Jefferies has told investors to “just buy it,” arguing that the Swoosh is waking from hibernation and is about to trade like the sleeping bear that finally got out of bed.
That’s a bold call for a stock that has spent the past two years sliding. Nike is down roughly 22% over the last year, battered by overstuffed shelves, shrinking margins, and nimbler rivals such as Hoka and On that have turned the running boom into their marketing campaigns. But Jefferies says Nike’s Sept. 30 report is “poised to signal a turning point as [the] sleeping bear awakens.” The firm on Monday reaffirmed its buy rating, set a $115 price target — about 66% above last week’s close — and argued that fiscal year 2027 still lines up for what the firm calls a “V-shaped rebound thesis” with plenty of evidence to support its “bullish stance.”
On the near-term numbers, Jefferies is pitching a “modest beat” — but the Street isn’t nearly as giddy. Consensus sees earnings of $0.27 a share on about $11 billion in revenue, both steep year-over-year drops. Jefferies is modeling a slight beat at $0.29 and a 4% sales decline, but even its note acknowledges more margin pain: gross margin down about 350 basis points, operating margin down 600. But Jefferies says those are related to the lingering costs of clearing out “classic” footwear and discounts. The firm says the first quarter is when Nike begins to show that it’s “rebounding off trough fundamentals.”
Jefferies’ bet is that investors will look past those bruises if Nike can show evidence of traction. Some of that evidence is already trickling in. Jefferies highlighted foot traffic turning positive in August, with Nike the only brand in its coverage group to notch growth. It also tracked rising “consideration” for both Nike and its Jordan brand, suggesting the brand is clawing back consumer interest. JD Sports — which gets nearly half its sales from Nike — told analysts last week the company is “doing all the right things” under new CEO Elliott Hill. Nike has lifted marketing spend by 9% to $1.63 billion this quarter, ahead of a packed 2026 calendar — which includes the 2026 men’s World Cup, where many of the tournament’s top national teams will take to the pitch in Nike kits.
And wholesale partners more broadly have sounded more upbeat, with Jefferies counting 80-plus mentions of Nike across retailer transcripts this year. Holiday order books, the firm says, are stronger than last year, and “broad distribution and fresh product innovation are driving stronger engagement.”
And that product innovation helps the story. The Vomero 18 has already surpassed $100 million in sales, while the Pegasus remains one of the most searched styles in the running segment. The Nike × SKIMS collaboration, launched late last week, drew mixed reviews but represents a push into women’s activewear that Nike can’t afford to ignore — especially as the company has already lost ground in the segment to Lululemon $LULU and Athleta.
The most important fix may be inventory. After a period of what Jefferies is calling “inventory insanity,” Nike finally reported flat stock levels last quarter. The firm expects tomorrow’s call to show further progress and believes the company will have a “clean marketplace” by the second half of the year — evidence that the backlog is finally clearing. That’s key for margins: fewer fire-sale discounts, fresher products, and better pricing power heading into the holidays.
Skeptics may point out that Nike’s backdrop hasn’t changed much. Tariffs are expected to shave roughly a billion dollars off profits this year, and the company is rolling out selective U.S. price hikes to offset the hit. China remains a wild card. And rivals have continued to nibble away at running-shoe share while Nike sorts itself out. Options pricing ahead of earnings implies an 8–9% swing in the stock — big enough to punish either camp if they’re wrong and a sign that plenty of investors are still hedging their bets.
So Nike is lacing up for tomorrow’s earnings, carrying all the doubts that have been weighing it down. Jefferies isn’t pretending those risks don’t exist; it’s waving them off as the noise that comes before a reset. If the company can show even incremental progress on cleaner shelves and steadier orders, the Street may finally start to believe the worst is over. If Nike can’t, the bear goes back to sleep, and the stock slog drags on. But Jefferies isn’t blinking — its analysts are betting on the wake-up call and leaving investors with a simple directive: "just buy it."
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