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Jefferies thinks the risk-reward outlook over the next five year is strong for Nike , particularly as the company attempts to regain its crown in the athletic apparel market. Analyst Randal Konik upgraded shares to buy from hold and named Nike a top pick. He also lifted his price target by $40 to $115, which suggests shares could gain a whopping 50.3% from Friday’s close. Konik said now is the right time to aggressively scoop up Nike shares given its upside potential and that its stock price is near a “valuation trough.” Nike shares trade at about 23 times trailing earnings, well below a peak above 37 reached in late 2023. “As Nike turns back on its innovation engine, channel inventories will be rebalanced and wholesale distro will be increased setting the stage for accelerating unit volumes and healthier full-price sell through driving stronger revenue growth and rising margins against a backdrop of reduced Street expectations (that are now way too low),” Konik wrote in a Monday note to clients. He cited global consumers’ continued preferences towards comfort, which is supportive of general athletic footwear and clothing trends, as well as a Jefferies survey that indicates strong U.S. consumer demand for Nike products as catalysts for Nike’s future growth. “This underscores the brand’s ubiquity and suggests the brand is still very strong ahead of future innovations with NikeSKIMS and in the running category,” he said, referring to a collaboration between Nike and SKIMS, a clothing brand co-founded by Kim Kardashian. The leadership of new Nike CEO and company veteran Elliott Hill is also a major tailwind behind the company’s efforts to again outgrow the market, according to the analyst. “NKE’s strategic missteps, including reduced product innovation and overemphasis of Nike Digital, allowed competitors to gain share,” Konik said. “Hill is intimately engaged with current and lapsed retail partners. We think Hill has the right playbook; it worked a decade ago, so it’s highly likely to work again. NKE 5Y mountain Nike stock performance. Nike shares are up just 1.1% this year, after a roughly 26% decline over the past year. To be sure, Wall Street isn’t entirely convinced of Nike’s turnaround potential. Citi downgraded the stock to neutral and slashed its price target earlier this month, citing a disappointing meeting with the new CEO and concerns that topline pressures seem likely to continue in the near term.
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