Nike ‘s mission to reclaim its glory in 2026 is clear. But the pathway forward won’t be easy. With earnings out Thursday evening, the famed apparel giant’s “Win Now” initiative under CEO Elliott Hill has certainly been winning over Wall Street analysts. Hill’s strategy includes sports-centered stores and a revival of wholesaler relationships. To keep investors in its corner, Nike still has to show and prove it, with continued signs of progress. A little more than two-thirds of analysts covering Nike have buy-equivalent ratings on the stock. During Wednesday’s Morning Meeting for Club members, Jim Cramer said, “Hill is doing what’s necessary. Nike is a little like Starbucks ; we don’t know when they’re going to turn. But they are going to turn.” With Hill just over a year into his tenure, Jim has repeatedly said it is too soon to expect a fix. “[Nike] has to start innovating, and I think they will. And, they gotta get rid of the inventory. I think they will,” Jim predicted. For those reasons, Jim said he wants investors who don’t own Nike to buy a small position, arguing that Nike may have “lost their touch” but thinks the iconic brand can make a comeback. Nike was one of five big-bounce stocks for 2026 that we highlighted earlier this month. Nike at a glance Year-to-date performance: down 12.2% Forward price-to-earnings multiple: 40 times versus a five-year average of 31.22 Our rating: Buy-equivalent 1 rating Our price target: $80 a share To be sure, Nike’s stock has lagged. The company saw a post-earnings pop of 6.4% on Oct. 1 — the day after fiscal 2026 first quarter results far exceeded expectations, signalling progress in Hill’s turnaround. At the time, we called the guidance for fiscal Q2 better than feared. While shares have given back those earnings gains and then some, Nike has been on a bit of an upswing since last month. Here are three ways Nike can keep its momentum going through Thursday’s earnings and into the new year. 1. Inventory cleanup Cleaning up the inventory is arguably Nike’s biggest hurdle. “For the stock to blast higher,” the company must clear the channel of the old products, and then it needs to be “filled with cool, new inventory,” Jim said during December’s Monthly Meeting . Over the past several years, Nike has been plagued with excess inventory as a consequence of pandemic supply chain disruptions. The company also grappled with the fallout of alienated third-party relationships as it continued to favor a direct-to-consumer pipeline long after Covid under the leadership of former CEO John Donahoe. As of late, Nike said that inventory of its classic footwear, including Air Force 1 and Air Jordan 1, is stabilizing. Dunk shoes, however, have a way to go. Wells Fargo analysts estimated last month that Dunk cleanup will continue at least another year through the company’s fiscal 2027 first quarter. “We believe once the dust settles, Nike will have absorbed a total $6 billion headwind from market cleanup on these three classics franchises,” analysts wrote. If all goes to plan, the headwind should dissipate. “Inventory decreased 2% versus the prior year as we have made steady progress on our plans for a healthy marketplace by the end of the first half of fiscal 2026,” Nike Chief Financial Officer Matthew Friend said during September’s earnings call. Goldman Sachs said it’s important that “Nike can reaffirm its commentary regarding healthy marketplace inventory levels” when it reports Thursday. 2. Product Innovation The Street and Jim are banking on fresh inventory. Earlier this year, Nike announced a sports shapewear collaboration with Kim Kardashian-backed Skims. More is underway next year, including the Nike Mind shoe collection, which becomes available in January, and Aero-Fit cooling technology, which will debut in soccer uniforms during this coming summer’s World Cup. Multiple analysts, including UBS, Bank of America, and BTIG, have all cited the global sporting event as a tailwind for Nike in the coming year. “This event could drive global interest in the athletic footwear and apparel space,” said BTIG analysts in a note to clients last week. Jim agrees, having said frequently that the World Cup is always an opportunity to load up on Nike’s stock. 3. China Recovery While getting the U.S. right is most important, part of Nike’s rebound hinges on China. In its earnings preview, Jeffries said it expects the China region “to remain a significant drag” on Nike’s top line. With the second-highest Street price target of $115, the analysts see a best-case scenario in which Chinese sales declines bottom out, and begin to inflect positively. While beating estimates in fiscal Q1, Nike’s sales in China did tumble 10% to $1.51 billion. Hill blamed “structural challenges in the marketplace.” He also said seasonal sell-through, or the measure of how fast retail inventory sells in a season or time period, continues to underperform and requires larger investments to keep the marketplace clean. China accounted for about 18% of Nike’s revenue during the quarter. U.S. tariffs on China have also raised import costs. Nike has estimated a $1.5 billion of associated costs in fiscal year 2026. UBS analysts are keen to hear from management about the impact on Nike’s margins and cash flow should the U.S. Supreme Court rule the tariffs illegal. While a ruling from the high court justices is expected early next year, the company is making strides to alleviate the pressures in the meantime. Steps include boosting sourcing and production efforts outside of China, working with its suppliers and retail partners to lower costs, and price increases on U.S. goods. Thankfully, solutions for China are high on Hill’s list of priorities. Hill is planning to win back consumer dollars in the world’s second-largest economy through store concepts rooted in sport. With about 5,000 Nike stores in China, Hill told CNBC’s Sara Eisen back in October that the rollout will take time. (Jim Cramer’s Charitable Trust is long NKE. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
