Nike (NKE) is showing signs of recovery as wholesale order books improve and channel inventories appear on track to be clean by mid-year, which would support a return to growth in H2, BofA Securities said in a Wednesday note.

The firm expects a modest Q1 upside and models EPS of $0.28 compared to consensus of $0.26, but notes management guidance implies gross margin will be down 350 to 425 basis points, including a 100 basis points hit from tariffs.

An improving wholesale order book and strength in spring orders signal confidence in the new team's strategy and the wholesale channel, the firm said.

The firm trimmed Nike's fiscal 2026 EPS modestly to a range of $1.54 to $2.77 to reflect higher tariffs but expects H2 margin stabilization from fewer promotions, better full price selling and a healthier inventory.

BofA Securities reiterated a buy rating and a $84 price objective on Nike.

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