Is Nike (NKE) Stock a Buy After the Post-Earnings Dip? Bernstein Says Yes

TLDR

• Nike shares fell about 9% after fiscal Q1 results missed revenue estimates.
• Earnings beat expectations at 48 cents per share, above the 44 cents forecast.
• Revenue came in at $11.21 billion, down 5% on a currency-neutral basis.
• Bernstein kept an “Outperform” rating and a $45 price target after the drop.
• Nike’s new “Pace” plan targets $2.5 billion in savings through fiscal 2031.

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Nike stock dropped nearly 9% in pre-market trade Friday. The fall came after the company posted mixed fiscal first quarter results.

NIKE, Inc., NKE

Adjusted earnings came in at 48 cents per share. That beat Wall Street’s forecast of 44 cents.

Revenue told a different story. Nike posted $11.21 billion, below the $11.35 billion analysts expected.

On a currency-neutral basis, revenue fell 5% from a year earlier. Greater China and EMEA both posted declines.

Nike Direct revenue dropped 8% for the quarter. The weakness spread across several parts of the business.

CEO Elliott Hill is trying to turn things around. He’s been working to revive growth after years of soft demand.

Stifel analysts aren’t ready to call a bottom yet. They pointed to Nike trading at 28 times earnings based on midpoint fiscal 2027 guidance.

Margins Improve Despite Revenue Miss

Gross margin rose 60 basis points to 42.8%. Lower warehousing and logistics costs drove the gain.

That improvement wasn’t enough to ease worries about the top line. Investors focused more on where sales are headed next.

Nike’s outlook for fiscal 2027 wasn’t encouraging either. The company expects revenue to decline by high-single digits for the year.

Adjusted earnings per share are projected between $1.15 and $1.35. That figure excludes about 15 cents in restructuring costs.

Nike is also mid-way through a major overhaul. The new “Pace” operating model aims to deliver $2.5 billion in cumulative savings through fiscal 2031.

The plan includes supply-chain changes, a new campus in India, and a shift toward three geographic regions. Nike expects around $1 billion in pretax charges tied to the program through 2031, including $300 million in fiscal 2027.

Hill says the company’s “Sport Offense” strategy is showing progress in performance categories. He admitted there’s still work ahead in Sportswear, Jordan Brand, and Greater China.

Short interest sits above 7% of Nike’s float. That’s a lot of investors betting against the stock, which can make swings sharper in either direction.

Bernstein Sees a Buying Opportunity

Bernstein analyst Aneesha Sherman is sticking with her “Outperform” call. Her $45 price target points to nearly 40% upside from current levels.

Sherman called the quarter’s weak guidance a necessary reset. She said Nike is clearing aged inventory in its Lifestyle and Jordan lines.

Greater China sales fell 26% on a currency-neutral basis. Sherman views Nike’s wholesale rightsizing there as a fix for structural oversupply rather than a red flag.

Nike shares now trade at a price-to-sales ratio just above 1x. That’s a steep discount to both the company’s own history and its industry peers.

The dividend yield has climbed to 4.95%. That’s a notable number for income investors watching the stock.

Nike holds $8.4 billion in cash and short-term investments. That gives it room to fund restructuring without touching the dividend.

The broader analyst consensus still rates Nike a Hold. The average price target sits a little above $39.