Baird Equity Research upgraded VF Corp., Canada Goose and Rocky Brands on Tuesday, August 28, increasing its “conviction level” on Nike. The investment firm sees back-to-school selling so far exceeding expectations and a more favorable macro backdrop entering 2026, which is expected to revive growth prospects for the active lifestyle sector.

“While 2025E earnings have been hit by tariffs, higher costs and sales risks now appear well embedded post-Q2 earnings reporting,” wrote Jonathan Komp, Baird’s lead analyst in the active lifestyle space, in a note. “Back-to-school spending thus far looks encouraging, and we see five factors supporting potentially better macro conditions and sentiment into 2026.”

Those five factors supporting a healthier macro-outlook for 2026 include:

  • Potential for less impact from tariff-related shocks on consumer sentiment/spending that could support an inflection in consumer confidence.
  • Moderate incremental stimulus for consumers tied to the One Big Beautiful Bill Act (OBBBA), including a greater standard deduction, no taxes on tips, a senior deduction, an expanded child tax credit, and raising the state and local tax (SALT).
  • Potential for lower interest rates and moderate core inflation, especially if oil prices remain lower.
  • Higher asset values with consumers’ net worth benefiting from the stock market at record highs, and housing conditions potentially improving if interest rates broadly decline.
  • Generally, the first comparisons in 2026 were easy, as 2025 conditions, especially in the first quarter through April, appeared to be impacted by initial tariff shocks and uncertainty, as well as stock market volatility.

For the current year, Komp said, “stable demand and clean inventory set the stage for better 2025 earnings,” before the reciprocal tariffs on U.S. imports “materially impacted” the outlook.

However, Komp believes that while calendar Q2 earnings reporting was challenging, the quarter has “effectively reset the bar for our coverage, as 2H25 estimates (and likely 1H26) now more clearly reflect headwinds from:

  1. current incremental reciprocal tariff rates of 30 percent for China and up to 20 percent for most other trading partners (vs. 10 percent for other trading partners after Q1 earnings seasons);
  1. generally cautious demand assumptions, both for consumer spending, and for orders from retailers, which in some cases have been pulled back materially in the face of tariffs; and
  2. greater commitment to cost savings across supply chains and broader organizations, which we think ultimately could help to drive positive operating leverage for earnings as tariff impacts become annualized and sales potentially remain strong.”

Baird also noted that back-to-school spending indications are “encouraging.” According to Baird estimates, U.S. footwear retail spending over the past six weeks has improved to down slightly year-over-year, which is much better than the 2025 year-to-date level, and the indicator recently turned positive on a two-year basis, signaling a healthy back-to-school period.

Komp noted, “While consumers still could experience greater impacts from tariffs (some potential lag between brands raising price and retail prices increasing), and there are signs of greater bifurcation (middle-to-lower income consumers/brands without momentum underperforming), the recent performance is materially better than we had been fearing immediately following the announcements of higher tariffs. Furthermore, year-over-year comparisons generally ease after the back-to-school period, with September, October and early November notably weaker last year (likely due to distraction/negativity leading up to the Presidential election). Accordingly, we think real-time indicators can remain strong in the upcoming months.”

As a result, Komp believes consensus near-term EPS growth should inflect over the next several quarters to justify “a more positive positioning, including toward laggards (even where current fundamental visibility is low), which stand to benefit the greatest.”

Among the laggards, Baird upgraded Canada Goose (GOOS) to “Outperform” and raised its price target to $24 a share. On August 26 shares of Canada Goose closed at $12.16, up $0.37.

Komp said about Canada Goose, “We have been impressed by improved fundamental performance for GOOS over the past several quarters, and we believe a continuation of recent brand momentum during seasonally more important revenue quarters could help the business to show greater margin leverage.”

Baird upgraded VF (VFC) to “Outperform” and lifted its price target to $20. Also on August 26, VF closed at $14.51, up $0.84.

Komp said about VF, “While we are not sure whether a healthier skate shoe trend emerges over the next 6-12 months (would be clearest path to VFC sentiment improving), we see good reason for sequentially improving financial performance as Vans resets action financial headwinds subside and more interesting product and social media activity potentially attract some consumer attention. Along with possible benefits from ongoing cost reductions and gradual debt reductions (FCF-driven), any inflection in Vans could drive a more positive view of VFC as a compelling way to gain exposure to a possibly better macro backdrop into calendar 2026 with specific catalysts.”

Baird upgraded Rocky (RCKY) to “Outperform” while increasing its price target to $40. On Tuesday, shares of Rocky closed at $29.93, up $2.53 from the previous day’s close.

Komp said on Rocky, “While an [approximately] $200M market cap limits current investment appeal for shares, we have been highly encouraged by RCKY’s recent performance, including the Q2 report in late-July which showcased the company’s ability to navigate current tariff uncertainty while fostering current higher growth opportunities for its Xtratuf (growing +strong-double-digits), Durango (+high-single-digits), and Muck (women’s/men’s +double-digits/+mid-single-digits) brands.”

Komp said Baird is not changing its view of the fundamental backdrop for “strong growth stories” such as On Holding, Boot Barn Holdings, Amer Sports, and Wolverine Worldwide, as we believe these companies can sustain strong brand momentum and also benefit from an improving macro backdrop. However, in light of a potentially improving macro backdrop and more positive sentiment entering 2026 based on the aforementioned factors, we are increasing our conviction for stories that we think have 70-100 percent+ upside potential with reasonably high conviction in selected bull-cases, including GOOS, VFC, and RCKY.”

Baird also raised its “conviction level” for Nike, based on prospects for improving macro conditions to improve the odds of current brand actions driving a strong financial recovery.” Baird has a price target of $88 on Nike. On August 26, Nike shares closed at $78.65, down $0.51 per share.

Image courtesy Canada Goose