Jordan Brand Key to Nike's Comeback, Analysts Say

Nike's Jordan brand sales have dropped by $2 bln in two years, but Bernstein analysts believe it can be reignited. With the right product launches, the brand could fuel a fresh growth cycle, lifting Nike's revenue growth to high-single digits and margins above 13%. However, if new Jordan launches fall flat, growth is likely to remain muted. The analysts conclude that Jordan is essential to Nike's recovery and the upside may outweigh the downside, but it will take years for real momentum to be visible.

Nike's (NYSE:NKE) stock has been under scrutiny due to the recent decline in sales of its iconic Jordan brand. The brand, once a significant contributor to Nike's revenue, has seen a $2 billion drop in sales over the past two years, shrinking from 15% to approximately 11% of total sales [1]. Despite this setback, Bernstein analysts remain optimistic about the brand's potential to reignite growth for Nike.

Bernstein analyst Aneesha Sherman recently raised Nike's stock price target to $90 from $85, maintaining an Outperform rating [1]. The analyst attributes the potential upside to the Jordan brand, noting that a successful product launch could initiate a multi-year brand cycle, driving high-single-digit percentage growth for Nike with margins exceeding 13% [1]. Under a bullish scenario, Bernstein estimates that earnings per share could reach $4.80 by fiscal year 2029, implying a current stock value of $120, representing a 56% upside [1].

However, the analysts caution that without successful Jordan brand revitalization, Nike's total growth might only reach mid-single-digit percentages, with margins struggling to exceed low double digits by fiscal year 2029, resulting in earnings per share around $3.60 and implying a current stock price of $70, or a 9% downside [1]. The key to this recovery lies in the right product launches, which could fuel a fresh brand heat cycle beginning in 2026 [2].

Investors should note that the Jordan brand's success is not guaranteed. Excess inventory and constant promotions have diluted the brand's excitement, pushing customers towards rivals [2]. Therefore, the potential upside may not materialize if new Jordan launches fail to capture the market's interest.

In conclusion, Nike's future growth heavily relies on the Jordan brand's ability to regain its former glory. While the potential upside is significant, it will take years for real momentum to be visible. Investors should closely monitor Nike's product pipeline and execution to gauge the brand's prospects.

References:
[1] https://www.investing.com/news/analyst-ratings/bernstein-raises-nike-stock-price-target-to-90-on-jordan-brand-potential-93CH-4197521
[2] https://www.investing.com/news/stock-market-news/can-the-jordan-brand-save-nike-4200787