Freedom raised Nike’s rating to “Buy” while cutting the target price to $51

Weak quarterly results and a forecast for further sales declines increased pressure on the shares of Nike (NKE). However, after the sell-off, Freedom Broker analysts Georgy Vashchenko and Danil Bondarets see recovery potential: in a report dated October 2, they raised their recommendation from “Hold” to “Buy,” while cutting the target price from $54 to $51.

The new target implies upside of about 55% versus the $32.87 closing price used in the recommendation model. Nike produces athletic footwear, apparel, and accessories. The company’s fiscal year ends in May. NKE 2027Q1 Company Update RU

Nike sales in China fell 26%

According to results for the first quarter of fiscal 2027, ended on August 31, Nike’s revenue totaled $11.2 billion, down 4% year over year. Earnings per share reached $0.48. Gross margin increased by 0.6 percentage points to 42.8%, while selling and administrative expenses declined by 3%. 

The biggest weak spot remained Greater China: sales in the region fell 26%. Direct sales and digital channels were also under pressure. At the same time, North America maintained positive momentum: footwear sales rose 1% and apparel sales rose 6%.

After the results were published, Nike shares fell by about 8.7% in after-hours trading. In Freedom’s view, the stock looks heavily oversold, although the technical picture remains unfavorable. NKE 2027Q1 Company Update RU

Management expects further revenue declines

According to Freedom’s analyst report, Nike expects revenue in the second quarter to decline by about 4%. For fiscal 2027 overall, the drop could be in the high single digits.

The adjusted EPS guide is $1.15–1.35, including $0.15 in restructuring costs. Management plans to present more detailed guidance at its Investor Day in November.

The company expects to improve performance through the PACE business transformation program. It calls for $2.5 billion in savings by fiscal 2031. Total transformation costs are estimated at $1 billion, including $300 million in fiscal 2027. Analysts emphasize that the recovery will take time. NKE 2027Q1 Company Update RU

Why Freedom raised its rating on the stock

Despite the worsened outlook, Freedom highlights several supporting factors: a recovery in North American sales, cost control, and Nike’s strong financial position. These help the company maintain profitability and fund its business transformation.

At the same time, the target price cut to $51 reflects a more cautious assessment of future performance. The rating upgrade is tied to the fact that after the share-price decline, the gap between the market price and the stock’s estimated value widened.

Key risks remain a prolonged recovery in the Chinese market, competition from cheaper brands, and shifting consumer preferences. The target price is based on the company’s projected cash flows. NKE 2027Q1 Company Update RU

The previous assessment assumed a slower recovery

In August, Freedom Broker cut Nike’s target price from $60 to $54 while maintaining a “Hold” rating. At the time, analysts pointed to weak demand in China and expected a slower return to sales growth.

The new quarterly report confirmed the challenges in the China segment. However, the further decline in the share price changed the risk/return balance, allowing the recommendation to be upgraded with a lower target price. 

Not an individual investment recommendation.