Nike lands an ‘unconventional upgrade’ from Wall Street. Why we’re still believers too
Even though the stock hasn’t made much of a gain recently, Nike is still worth a place in the Club’s portfolio. “It’s a fraction of what it used to be, but it’s still a great company,” Jim Cramer said during Wednesday’s Morning Meeting. “So I think it’s something you have to hold on to.” Jim admitted that Nike’s stock performance was “disappointing,” echoing the disappointment he expressed during the February Monthly Meeting. Shares are down 5% over the last five sessions and are down more than 12% since the beginning of the year. Nike, which ended Wednesday below $56 per share, is trading at the lowest levels since we initiated a position around $68 in September. The last time Nike closed below $56, in April 2025, the market was in the throes of tariff-induced chaos. But analysts at Barclays offered a glimmer of hope on Wednesday, upgrading the stock from a neutral to a buy-equivalent rating. Analysts acknowledged that this was “an unusual move toward the peak of skepticism” because Wall Street’s expectations for the coming years may still be too high. However, analysts wrote that “the risk to reward profile has shifted to the upside, making Nike an attractive investment opportunity at this stage.” Believing the worst could be behind the sportswear giant, Barclays raised its stock price target to $73 per share from $64. Analysts said they were encouraged that Nike, under CEO Elliott Hill, had improved its performance and cleaned up its inventory in North America and taken steps to revitalize its iconic brand. North America, its largest market by revenue, has been Hill’s top priority since taking office in October 2024. Analysts noted that Nike’s running business, in particular, has delivered impressive growth under Hill. NKE 1Y mountain Nike’s 12-month stock performance. Of course, Barclays acknowledged that Nike’s turnaround still faces risks from tariffs, competition and the potential weakening of consumer spending tied to the Middle East conflict. “I think people are becoming more and more skeptical,” Jim said. Like Barclays, it noted increasing competition from brands such as Hoka, On, New Balance and Adidas. China, once a major growth engine for Nike, has also become a major problem. When Nike reported quarterly results in mid-December, falling sales in China were a big reason why shares fell 10.5% the day after earnings. “China is not working, [the] direct to consumer [strategy is] Jim said Nike’s struggles in China were a motivating factor behind Wells Fargo’s decision last week to remove Nike from its “top picks” list. Analysts also cut their fiscal 2027 earnings per share estimates due to weakness in the region. Despite these adjustments, Wells Fargo reiterated its buy-equivalent rating on the stock. We’re not the only ones who see value in Nike’s shares. Late last year, a round of Nike board members and insiders including Apple CEO Tim Cook made a splash by buying shares on the open market. After Nike’s post-earnings stock decline, this was a positive vote of confidence in its comeback. Jim Cramer’s Charitable Trust has long been on the receiving end on the evening of March 31, when Nike releases its next quarterly numbers. See here for a full list of stocks.) When you subscribe to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a transaction alert before buying or selling a stock in his charitable foundation’s portfolio. CLUB INFORMATION, NO Fiduciary OBLIGATION OR DUTY SHALL EXIST OR BE CREATED BY RECEIVING ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. THERE WAS NO SPECIFIC RESULT OR PROFIT. GUARANTEED.
