Why Nike Is on The Verge of a Massive Comeback Rally

Key Points

• Nike shares are down 60% from their all-time high 2 years ago.
• However, multiple analyst updates suggest this could be the time to be brave.
• Oversold technicals and macro tailwinds signal a rally could be on the cards.

Shares of athleisure giant Nike Inc. NYSE: NKE shares have been in a steep decline for more than 2 years, shedding a staggering 60% from their all-time high in late 2021. As we head into the first couple of weeks of the new year, they’re still struggling to find buyers, trading at levels last seen in 2018. Wall Street is keeping a close eye on the Oregon-headquartered company as the pressure to turn things around is mounting.

But for those of us on the sidelines, this could be the perfect time to start paying attention. While the downtrend has been brutal, there are several reasons to believe that 2025 might mark the start of a massive comeback rally for Nike. Let’s jump in and take a look.

Elliott Hill Takes Over as CEO: A New Era for Nike?

Starting with Nike’s fundamental performance, 2024 was a mixed bag, to say the least. While the company delivered some solid headline number beats throughout the year, margins continued to feel the squeeze from rising costs and an increasingly competitive market. That said, Nike finished the year on a high note, smashing expectations with its latest earnings report in December. 

This late-year momentum is a positive sign for investors, even if revenue was still down year over year. Adding to the optimism, Nike recently brought in Elliott Hill as its new CEO, a move that has analysts and investors buzzing. Hill has a reputation for driving operational efficiency and revitalizing struggling brands, so February’s earnings report will be closely watched to see if his influence is already making an impact. 

Bullish Analyst Upgrades Signal Confidence in Nike’s Turnaround

Adding to the potential for a turnaround is the wave of bullish analyst updates Nike has received in recent weeks. In a note to clients, the team over at Piper Sandler upgraded their rating on Nike from Neutral to Overweight last Friday, setting a fresh price target of $90. From where the stock closed on Friday, it points to a targeted upside of some 30%.

Piper Sandler isn’t alone in its optimism. DA Davidson, Truist Financial, and Robert W. Baird all issued Buy ratings on Nike in December, highlighting their confidence in the company’s ability to bounce back. Piper Sandler’s analysts are particularly encouraged by CEO Elliott Hill’s “intensified urgency” in addressing the challenges facing Nike, as well as the expectation that the company will return to profitable growth by late 2025. For investors who like getting in on the ground floor of a potential rally, this is shaping up to be an attractive entry point.

Turnaround Risks: Why Some Analysts Are Urging Caution

Of course, no turnaround story is without its risks. The stock has started 2025 with six consecutive down days, a streak that underscores how much the bears still control the narrative.

Additionally, while many analysts are bullish, not everyone is convinced. December also saw a handful of Hold and Neutral reiterations from analysts urging caution. They’re waiting to see if the new CEO can deliver real results before making any big calls, and some are concerned about the lingering pressure on Nike’s margins. 

Why Nike’s Current Setup Appeals to Bargain-Loving Investors

These are valid concerns, but for the bargain-loving investors out there, there’s a lot more to like than dislike right now. Even Nike’s technical setup is another reason to be optimistic about a comeback. The stock’s Relative Strength Index (RSI) is currently sitting at 28, a signal that it’s extremely oversold and likely ready to see a bounce. 

On top of that, shares are back-testing a long-term level of support that dates all the way back to 2018. This area should provide a solid foundation from which the bulls can build, especially as broader market conditions improve. 

For those of us who are happy to lean into the analysts’ bullish outlook, this looks like an incredible entry opportunity. With a compelling mix of strengthening fundamentals, bullish sentiment from analysts, and technical signals pointing to an oversold condition, there are so many reasons to be excited about Nike in 2025.