Nike (NKE) shares rose modestly on Wednesday, August 10 after analysts at TD Cowen issued an upgrade on the stock to Buy from its previous Hold rating. The analysts cited margin recovery potential and signs of stronger product momentum under new management. The firm raised its price target on the stock to $85 from $62 per share. NKE shares closed at $74.25 on Wednesday.

The analyst team, led John Kernan, said Nike could generate more than $4 in earnings per share and $6 billion in free cash flow as execution improves.

Kernan gave three reasons to believe in Nike’s comeback:

  • Stabilizing margins;
  • Stronger execution under new management; and
  • Data showing Nike and Jordan picking up momentum while rivals falter.

“Declining brand heat of varying degrees at New Balance, Adidas, Saucony, Skechers, and Asics — which gained share from Nike since 2022 — leave more room for dollar growth at Nike globally,” Kernan said in the Wednesday note.

Cowen’s consumer tracking data also sees Nike gaining momentum in basketball and lifestyle trends while running remains a “share leader by a wide margin.”

“Nike remains a preferred athletic apparel brand across genders, ages and income levels within our proprietary TD Cowen Consumer Tracker survey,” Kernan says.

Additionally, the firm’s data suggests that Nike’s market share is stabilizing under CEO Hill, and even showing signs of increasing sequentially.

According to its August 10 note, the firm expects Nike to return to sales growth in the fiscal fourth quarter, excluding currency effects, with mid-single-digit growth in fiscal 2027. Operating margins are projected to recover to 9.3 percent, supporting earnings of $2.59 per share, above the current Wall Street consensus of $2.44.

Williams Trading’s Sam Poser raised his price target to $100 with a Buy rating, while Bernstein lifted its target to $90 on optimism for the Jordan brand. UBS remains Neutral with a $63 target, citing uncertainty over the pace of revenue recovery.

Nike, Inc. generated $46.3 billion in revenue in the last fiscal year ended May 31 with a gross profit margin of 42.7 percent.

Image courtesy Nike (shown: LeBron XXIII Signature Shoe)