RBC Capital Markets on Thursday upgraded Nike shares to Outperform from Sector Perform, highlighting a stronger setup into 2026 and beyond. The broker raised its price target to $90 from $76, implying roughly 25% upside from current levels.
RBC pointed to several drivers of the upgrade, including a steeper-than-expected revenue recovery, improved product offerings, and a revamped leadership team. The firm expects revenue growth to accelerate by the third quarter of fiscal 2026, supported by new product launches and the commercial opportunity from the 2026 FIFA World Cup.
Nike sponsors six of the top ten FIFA-ranked teams, including France, England, and Brazil, and RBC estimates the event could add $1.3 billion to sales, equivalent to a nearly three percentage-point boost.
RBC also argued that Nike’s revenue underperformance against faster-growing peers such as On and Hoka likely bottomed in fiscal 2025. The analysts expect the growth gap to narrow in 2026, as challenger brands mature and Nike regains shelf space at wholesale partners.
The analysts also cited Nike’s increased marketing spend, with a $4.9 billion budget projected for fiscal 2026, nearly double Adidas’s. They expect stronger brand visibility under Chief Marketing Officer Nicole Graham to help drive engagement and support the company’s reset strategy.
Product innovation remains central to the bull case. Nike has largely completed its “9-box” Running Footwear reset across key franchises such as Pegasus, Vomero, and Structure, and plans 26 new running shoe launches through 2026—more than any rival.
Basketball and football lines are also being refreshed, with new styles planned around the World Cup. CEO Elliott Hill’s “Sports Offense” strategy emphasizes performance-driven categories, supported by a broader leadership overhaul earlier this year.
RBC forecasts Nike’s gross margin to recover to 45% and EBIT margin to reach 13% by fiscal 2029, supporting earnings above $4 a share. Its estimates for fiscal 2027 and 2028 earnings are 5–17% ahead of consensus.
“We anticipate steeper revenue recovery shape supported by World Cup driving narrowing of relative performance gap, which could lead to beat/raise cycle with limited downside,” the analysts led by Piral Dadhania wrote.
In the near term, the analysts project first-quarter fiscal 2026 revenue of $11 billion, down 6% on a currency-neutral basis, with earnings of 23 cents a share. While still weak, they see growth accelerating in the second half of the year.
The team expects Nike to generate $6 billion in annual free cash flow by fiscal 2029, underpinned by sustained revenue growth of 5–6% and improved inventory management.
Source :
https://www.investing.com/news/stock-market-news/nike-raised-to-outperform-at-rbc-on-revenue-recovery-world-cup-boost-expectations-4243903
