We initiate coverage on Nike with a Hold rating and a $35.00 twelve-month price target. At 21.0 times normalized fiscal 2028 earnings, current valuation balances lifestyle inventory headwinds in Jordan and China against solid performance product growth and a well-capitalized balance sheet.
Key points
- $34.71 per share prices an extended earnings reset, valuing Nike at 27.8 times guided fiscal 2027 adjusted EPS and 21.0 times normalized fiscal 2028 earnings.
- $1.64 in annual dividend commitments exceeds guided fiscal 2027 adjusted net income of $1.25 per share, though $8.37 billion in liquid reserves secures the payout.
- -26% currency-neutral revenue contraction in Greater China and mid-teens declines in Jordan confirm that lifestyle cleanup will suppress top-line recovery into fiscal 2028.
The call
The market is about right on Nike at $34.71. At this price, the stock requires fiscal 2028 revenue to stabilize near $43.5 billion and operating margins to recover to 7.5%, yielding $1.65 in earnings. Investors have already factored in a high-single-digit top-line contraction and significant earnings compression for fiscal 2027.
Revenue and operating cash flow ($ billions)- Revenue ($B)
- Operating cash flow ($B)
Reported annual revenue and operating cash flow (FY24-FY26) with FY27-FY28 analyst forecasts.
We believe earnings will bottom this fiscal year as the Pace restructuring delivers $2.5 billion in cumulative gross savings through fiscal 2031. Performance running and basketball franchises are expanding at double-digit rates, but clearing aged lifestyle inventory and re-establishing scarcity in Jordan will cap near-term recovery, keeping the stock tracking broader market returns over twelve months.
Diluted earnings per share and dividend coverage ($)- Reported Diluted EPS ($)
- Analyst Forecast EPS ($)
Historical diluted EPS from SEC fact table with analyst FY27E adjusted and FY28E recovery forecasts.
Valuation
| Valuation driver | Metric value |
|---|
| Fiscal 2028 estimated revenue | $43.5 billion |
| Fiscal 2028 operating margin | 7.5% |
| Fiscal 2028 estimated diluted EPS | $1.65 |
| Target forward P/E multiple | 21.0 times |
| Twelve-month price target | $35.00 |
A 21.0 times multiple on fiscal 2028 earnings reflects a fair valuation for a global athletic footwear leader resetting distribution and protecting its 4.7% dividend yield. Downside is buffered by $8.37 billion of cash and short-term investments against $7.89 billion in total debt. With the stock trading less than 1% below our $35.00 price target, the risk-reward profile is balanced.
Risks
- Greater China digital restructuring stalls, driving additional inventory write-downs and wholesale concession demands across regional doors.
- Cash consumption from Pace severance and $2.0 billion of near-term bond maturities forces a dividend reduction or suspension.
- Aggressive promotional discounting by footwear competitors erodes full-price realization across North American wholesale accounts.
What would change my mind
Re-accelerating Jordan wholesale sell-through and positive Greater China revenue inflection within the next two quarters would warrant an upgrade to Buy.