08:33 AM EDT, 06/27/2025 (MT Newswires) -- Nike ( NKE ) is positioned for a cautious recovery as its fiscal Q4 sales modestly outperformed expectations across most regions except China, Morgan Stanley said in a note Friday.

Nike ( NKE ) reported fiscal Q4 revenues of $11.1 billion, down 12% year-over-year, but both revenue and earnings per share of $0.14 exceeded market expectations.

Morgan Stanley said Nike ( NKE ) has set conservative guidance for Q1 and fiscal 2026 to better align with ongoing macroeconomic challenges.

The Wall Street firm raised its price target to $64 from $61 while maintaining an equal-weight rating based on management's decision to set "low expectations" for both the first quarter and the full year.

The shift is a positive change, however, after two years of over-ambitious targets and missed guidance, making it more likely that Nike ( NKE ) can deliver modest beats going forward, the analysts said.

The firm said it remains cautious, however, about Nike's ( NKE ) long-term growth and margin prospects, particularly in a fragmenting global sportswear market.

While recent sales upside was driven by aggressive inventory liquidation and discounting, these tactics have come at the expense of gross margins, which remain under significant pressure, the firm said.