Goldman Sachs analyst Brooke Roach reiterated a Buy rating on the shares of Nike Inc (NYSE:NKE) with a price target of $118.00. Nike’s F4Q earnings result is scheduled for June 27.

The analyst is encouraged by the green shoots in Nike’s innovation portfolio, and looks for a greater understanding of NKE’s future innovation pipeline and plan to scale these new innovations on the company’s F4Q earnings call.

Nike’s product franchise lifecycle management efforts will weigh on F1H revenue growth, particularly in the company’s DTC channel, said the analyst.

These efforts, according to the analyst, could potentially have an uneven effect on quarterly sales growth throughout the fiscal year. 

For F1H25, NKE called for -LSD% revenue growth. Since this outlook was provided in late March, the analyst has seen choppy macro trends including FX volatility, traffic, and consumer sentiment.

Also Read: Nike’s Multiyear Cost-Cutting Strategy Leads To Layoffs In Europe: Report

So, the analyst reflects the investor’s concerns regarding NKE’s FY25 formal outlook and the nuances within, with some concern on the potential weighting of quarterly growth cadence, FX, and any impact of ongoing conservatism in wholesale order books.

The analyst expects gross margin-led profit expansion opportunity for NKE into FY25, with structural drivers from price/mix, full price sales, supply chain efficiency, and other supply chain drivers such as freight providing tailwinds.

The analyst notes NKE’s momentum in China will also be a key focus into F4Q results, particularly within DTC ecommerce.

With a choppy near-term path for growth, the analyst continues to notice NKE will benefit from innovation reacceleration, a strengthening inventory backdrop, and margin recapture. 

Price Action: NKE shares are trading lower by 1.84% at $94.11 at the last check Wednesday.

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