10:46 AM EDT, 10/01/2025 (MT Newswires) -- Nike's ( NKE ) fiscal Q1 print and Q2 guidance suggest turnaround efforts are mostly on track, Morgan Stanley said in a Wednesday research report.

The firm said the results were enough to support near-term turnaround conviction, particularly after the stock's recent pullback and signs of positive rate-of-change, but added that they did little to resolve skepticism about Nike's ( NKE ) ability to return to its prior growth and profitability trajectory.

Topline outperformance was broad-based across geographies, suggesting the KPI for the stock is moving in the right direction in key areas. However, the analysts said revenue composition was not high quality, while promotional activity in EMEA deteriorated amid gross margin headwinds from incremental tariffs.

Markets viewed Nike's ( NKE ) below-consensus Q2 revenue and EPS guidance, which implies a sequential step-down in fundamentals, as reasonable, with expectations for second-half growth intact. Morgan Stanley said it believes the company could beat its Q2 guide, particularly on topline and gross margin.

The brokerage raised its fiscal 2026 EPS forecast to $1.47 from $1.24, citing flow-through of the Q1 beat and positive Spring orderbook commentary.

Morgan Stanley reiterated its equalweight rating on the stock and increased its price target to $72 from $70.

Shares of Nike ( NKE ) were up 3.8% in recent trading.

Price: 72.36, Change: +2.63, Percent Change: +3.76