Barclays upgrades Nike's rating to Overweight, shares rise 2%, citing that it has reached the "bottom of the fundamentals"

Investing.com - Nike Inc. (NYSE:NKE) stock rose 2% on Wednesday after Barclays upgraded the sportswear company’s rating from Equal Weight to Overweight and raised the target price from $64 to $73.

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Barclays analyst Adrienne Yih cited recent operational progress, financial inflection points, and management’s disciplined actions as reasons for the upgrade. Yih commented, “While we acknowledge ongoing risks, we believe the risk/reward profile has shifted favorably, making NKE an attractive investment opportunity at this stage.”

The analyst pointed out that Nike has made recent advances in inventory management, operational resets, and strategic focus on brand health and profit margin stability. Yih noted that the upgrade is based on Barclays’ view that investor sentiment has peaked, despite evidence that North American resets are proceeding as planned.

Barclays emphasized that tangible operational improvements have already occurred in North America, including double-digit growth in the running category and sales growth outpacing inventory growth. The firm stated that investor skepticism about the transformation has not fully reflected these improvements, while overemphasizing known and ongoing reset risks in China, Asia-Pacific, and Latin America.

The analyst also responded to Barclays’ mischaracterization of wholesale channels as “stuffing,” describing it as a normal replenishment cycle.

Barclays acknowledged that risks remain, particularly from tariffs, geopolitical risks, and demand uncertainties. However, the firm indicated that company actions and early financial inflection points suggest the worst may be behind us.

For long-term investors, Barclays stated that as Nike approaches a fundamental bottom and prepares for re-growth, the stock offers an attractive risk/reward profile.

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