Nike Inc. (NKE) got a nice boost Wednesday, climbing over 4% as Wall Street weighed in with fresh perspectives ahead of next week's earnings report. The enthusiasm came courtesy of Guggenheim, which slapped a Buy rating on the athletic apparel giant with a $77 price target as it initiated coverage.

But here's the thing: not everyone's ready to get excited just yet. Analyst Simeon Siegel at Guggenheim sees upside potential, while Cristina Fernandez at Telsey Advisory Group maintained a more cautious Market Perform rating with a $75 target. Telsey's take is particularly interesting because it lays out exactly what investors should watch when Nike reports fiscal second-quarter results on Thursday, December 19th after the market closes.

Fernandez expects Nike to strike a balanced tone when it faces investors next week. Management will likely acknowledge some early wins in its turnaround strategy while being honest about the significant heavy lifting still required to get back to profitable, sustainable growth across all four geographic regions. The real question is whether Nike can return to sales growth in the second half of fiscal 2026 and into fiscal 2027.

The numbers Telsey is projecting aren't exactly thrilling. The firm expects fiscal Q2 sales to drop 1.8% to $12.13 billion, slightly worse than the FactSet consensus calling for a 1.2% decline to $12.20 billion. Breaking it down by region in constant currency terms, Telsey sees a 2.6% overall decline with Asia Pacific down 1%, EMEA down 1%, North America down 2%, and China taking the biggest hit at down 7%.

The margin picture looks equally challenging. Telsey anticipates gross margin pressure of 300 basis points year-over-year to 40.6%, driven by liquidation activity and tariff impacts contributing 175 basis points of pain. SG&A expenses are expected to deleverage 250 basis points to 34.9% of sales thanks to marketing investments, including the NikeSKIMS launch. Put it all together and operating margin could contract a hefty 550 basis points to just 5.7%. Telsey's EPS estimate of 36 cents sits just below the 37-cent consensus.

There are some bright spots, though. Feedback from U.S. retailers on Nike's new running products has been encouraging, and store traffic looked stronger year-over-year during Black Friday weekend. That's something, at least.

Still, the headwinds are real. Nike continues working through inventory rationalization, pulling back Dunk units across China, Asia Pacific, Latin America, and EMEA, as well as at Converse. Digital traffic declines aren't helping matters, and tariff costs estimated at roughly $1.5 billion for fiscal 2026 add another layer of pressure management has to navigate.

Nike shares were trading up 4.17% at $65.96 Wednesday afternoon.