Nike upgraded by KeyBanc as turnaround gains traction after Q1 beat

Investing.com -- KeyBanc upgraded Nike to Overweight after first-quarter results showed early signs of a recovery under the company’s “Win Now” plan.

Analyst said the quarter pointed to improving execution in key areas such as running, North America and wholesale. Running sales rose more than 20% while revenue in North America grew 4%. Wholesale sales were up 7%.

Analysts said new product structures, a cleaner marketplace and healthier inventory suggest the turnaround is beginning to stick.

Nike highlighted a stronger innovation pipeline and said spring order books were up year-on-year, signalling further improvement ahead.

Nike has reorganised its running business into three product tiers to allow for one new major shoe release each season.

The company plans to apply that model to football, basketball and other categories to reach younger shoppers. It also said stabilisation was nearing for core franchises such as Air Force 1 and Air Jordan 1, while the Dunk line was being deliberately reduced.

“While we acknowledge some NT choppiness remains from tariffs, digital, and China, we believe that the Sport Offense, innovation pipeline, and marketplace resets will continue to better position Nike for a return to sustainable growth/margin recovery,” analysts said.

The analyst said they had been critical of Nike’s handling of digital sales and China but now see enough progress to back a return to growth. First-quarter revenue rose 1.1% to $11.7 billion, beating Wall Street estimates. Earnings of 49 cents a share topped expectations of 27 cents.

Nike guided to a low-single-digit revenue decline in the second quarter but said order trends and product launches support a stronger second half. KeyBanc set a $90 price target.

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