Nike Posts Q2 Earnings Beat, Expects Tariff Headwinds From China

Shares of Nike Inc (NYSE:NKE) continued to tank in early trading on Friday, even after the company Thursday reported upbeat fiscal second-quarter results.

Here are the key analyst takeaways:

• Needham analyst Tom Nikic reaffirmed a Buy rating, while cutting the price target from $78 to $68.
• Telsey Advisory Group analyst Cristina Fernández maintained a Market Perform rating, while trimming the rice target from $75 to $72.
• JPMorgan analyst Matthew Boss reiterated an Overweight rating and price target of $86.
• Guggenheim Securities analyst Simeon Siegel reiterated a Buy rating and price target of $77.

Check out other analyst stock ratings.

Needham: Nike's turnaround "is still struggling to gain traction and continues to take longer," Nikic wrote in a note. While Nike's strategy of focusing on sport and re-engaging with wholesale is sound, the company’s issues before CEO Elliott Hill took over appear to be "far deeper than we initially realized," he added.

The analyst mentioned key takeaways:

• Performance was driven by 8% growth in Wholesale, while DTC declined 9%.
• The decline in Classics was offset by growth in performance categories. Revenue from classic
• The company continued to face "major challenges" in Greater China.

Telsey Advisory Group: Nike again reported an earnings beat, driven by revenue growth in North America and wholesale, Fernández said. She added, however, that all other regions remained negative, with the performance in China being "much worse than expected."

"Looking ahead, Nike continues to reiterate that progress will not be linear and that getting back to a double-digit operating margin will take time," the analyst wrote. This suggests that the current consensus estimates for fiscal 2027 for operating margin to expand to about 9%, from around 6.5% in fiscal 2026, "could prove optimistic," she further stated.

JPMorgan: Nike reported earnings of 53 cents per share, topping Street expectations of 37 cents per share, backed by revenue growth 1% year-on-year, Boss said in a note. Gross margins declined by 300 basis points (bps) to 40.6%, he added.

Management guided to third-quarter revenues declining by low-single digits, below Street expectations of 1.5% growth, the analyst state. He further wrote that there were, however, three "key areas with accelerating momentum within the portfolio," namely:

• North America
• Wholesale
• Running

Guggenheim Securities: Revenues in North America grew 9% year-on-year, while EMEA (Europe, the Middle East and Africa) declined 1% in constant currency terms, APLA (Asia Pacific & Latin America) was down 4% and Greater China plummeted 16%, Siegel said. The company expects to face continued headwinds in Greater China, he added.

Nike's profits continue to be under pressure from US tariffs, the analyst stated. "However, we believe the beginning signs of revenue growth coupled with ongoing improvements in Operating Overhead, makes Nike's turnaround a "When" rather than an "If," he further wrote.

NKE Price Action: Shares of Nike had declined by 9.66% to $59.29 at the time of publication on Friday.

Read More:

• Nike’s ‘Win Now’ Strategy Shows Early Wins, But Q2 Earnings Expected To Slip

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