What Happened?
Shares of athletic apparel brand Nike (NYSE:NKE) jumped 4.3% in the morning session after J.P. Morgan upgraded the stock to Overweight from a Neutral rating, citing a potential multi-year recovery.
The investment bank also significantly boosted its price target to $93 from $64. Analysts at the firm pointed to a potential inflection point for revenue growth, which they expected to re-accelerate in the second half of 2026 and into 2027. The upgrade was based on what the firm called a "five-pronged multiyear recovery path," forecasting annual earnings growth in the high-teens to 20% range over the next five-plus years. This bullish outlook was also supported by the well-received launch of recent products, which contributed to positive consumer sentiment.
After the initial pop the shares cooled down to $79.36, up 4% from previous close.
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What Is The Market Telling Us
Nike’s shares are somewhat volatile and have had 11 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was about 1 month ago when the stock gained 16.1% on the news that the company reported fiscal fourth-quarter 2025 results that beat Wall Street's expectations and outlined plans to mitigate costs.
Although Nike's fourth-quarter revenue fell 12% to $11.1 billion, the figure was still better than analysts had feared. The company reported earnings per share of $0.14, topping the consensus estimate of $0.12. Investors were particularly encouraged by the company's strategic plans, including efforts to reduce its reliance on manufacturing in China. Nike announced it expects to lower the proportion of US-bound footwear sourced from China from 16% to the high single-digits by the end of fiscal 2026. This move is aimed at mitigating the impact of tariffs, which the company warned could add about $1 billion in costs. Despite the sales decline and the significant drop in gross margin, the market reacted positively to the earnings beat and the proactive steps to re-align the supply chain for future growth.
Nike is up 7.7% since the beginning of the year, but at $79.36 per share, it is still trading 11.3% below its 52-week high of $89.44 from September 2024. Investors who bought $1,000 worth of Nike’s shares 5 years ago would now be looking at an investment worth $824.36.
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