Is The Worst Over For Nike? BofA Says Prospects Might Improve After Peak Headwinds In Q4
Synopsis
BofA also said that the impact of tariffs may not be as severe as previously anticipated.
Bank of America has reiterated its 'buy' rating on Nike's (NKE) shares and said that sports brand's fiscal fourth quarter is expected to see peak sales and margin pressure, with performance improving thereafter.
The company is actively clearing out existing inventory ahead of upcoming launches and currently has only a few new products on shelves. Nike is set to report its Q4 results on June 26, after the market closes.
"We think continued inventory cleanup actions through 1H26 will allow innovation to scale at a robust pace, leading to a sales inflection," the investment bank said in a note to investors.
BofA also said that the impact of tariffs may not be as severe as previously anticipated.
Nike has a diversified supply chain across Southeast Asian countries, and its production in China, the country subject to the highest tariffs, mainly serves the local market.
The firm said that weaker demand in China for U.S. brands is already reflected in the company's share price.
On Stocktwits, the retail sentiment for the company shifted to 'bearish' from 'neutral.'
User comments were divided, with one flank having lost confidence in the sports brand's turnaround and the other calling it a great buy at current levels.
Nike shares are down 20% year-to-date.
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