• Nike's second-quarter earnings for fiscal year 2026 exceeded expectations, but the company faces profitability issues due to a decline in EPS and digital revenues.
• The Chinese market's underperformance is significantly impacting Nike's profit margins, contributing to a decline in gross margins for two consecutive quarters.
• Despite a positive earnings report, Nike's stock price dropped over 10% in premarket trading, attributed to challenges in the Chinese market and rising costs.

Nike Inc. (NYSE:NKE) is a leading global sportswear company known for its innovative products and strong brand presence. On December 19, 2025, Truist Financial set a new price target for Nike at $70, which is a 6.66% increase from its current trading price of $65.63. This adjustment reflects optimism about Nike's potential despite recent challenges.

Nike's second-quarter earnings for fiscal year 2026 exceeded analysts' expectations, showcasing strong sales performance. However, the company's earnings per share (EPS) have declined, indicating potential profitability issues. This decline in EPS, coupled with a 14% drop in digital revenues, suggests that Nike is facing hurdles in maintaining its profit margins.

The Chinese market, a significant revenue source for Nike, is currently underperforming, adding pressure to the company's profit margins. This weakness in China is a key factor in the decline of Nike's gross margins for the second consecutive quarter. As highlighted by analysts, this has led to revised forecasts for Nike, reflecting concerns over its future profitability.

Despite the positive earnings report, Nike's stock price experienced a significant drop of over 10% in premarket trading. This decline is attributed to a sharp decrease in second-quarter profit, driven by challenges in the Chinese market and rising costs. Analysts suggest that these issues may be temporary, advising investors to remain patient with Nike's stock.

Nike's current stock price of $65.63 represents a slight decrease of 0.09% or $0.06. The stock has fluctuated between $65.40 and $66.97 today, with a market capitalization of approximately $97 billion. Over the past year, Nike's stock has seen a high of $82.44 and a low of $52.28, indicating significant volatility in its market performance.