Why Nike Stock Could Be 2025’s Top Comeback Play

Key Points

• Nike shares have been consolidating after a multi-year downtrend, showing signs of recovery.
• Recent fundamental performance has been strong, with consistent EPS beats throughout 2024. 
• Multiple bullish updates from the analysts also suggest further upside potential in the near term. 

Nike Inc NYSE: NKE shares have been continuing to consolidate after a painful three-year downtrend that finally looks to be running out of steam. 2021's all-time high seems a long way away now, with shares nearly 60% lower and back at 2018 levels. However, there are plenty of reasons to think the bears are on the verge of throwing in the towel, which could make Nike the sneakily best buy heading into February. 

As we head into the first couple of weeks of the year, the broader market is trading just below all-time highs, as seen with the S&P 500 index, and investors are still fond of equities. These macro factors are contributing to a risk-on sentiment that should fuel investor interest in stocks that are still playing catch-up on last year, which is exactly what Nike is offering right now. 

Nike’s Fundamentals Set the Stage for a Strong 2025

Let's jump in and take a look at the stock's fundamental performance from the past couple of quarters. In December, Nike smashed expectations with its most recent earnings report, beating analyst expectations for EPS as they did in each of 2024's reports. Their revenue prints weren't as consistently hot throughout the year, but they did meet analyst expectations in December, which sets them up well to build on this going into 2025. 

Nike's new CEO, Elliott Hill, spoke bullishly in December's report about the company's comeback prospects, and investors seem to be cautiously optimistic that he can deliver. Still, Nike will need to deliver in their earnings reports this year, as the market mightn't have much stomach for further declines in revenue growth and margins.

Competitive Market? Analysts Still See Nike as a Strong Contender

That being said, recent bullish analyst updates support the thesis that now could be the time to be brave. Earlier this month, the team at Piper Sandler upgraded their rating on Nike from Neutral to Overweight.

Analyst Anna Andreeva thinks the company can return to healthy, profitable growth by the end of the year, and although the market is becoming competitive, Nike has a track record of making successful turnarounds. 

Her fresh price target of $90 points to a targeted upside of nearly 20% from where the stock closed on Wednesday, January 29, 2025, which should excite investors.

Cautious Views Are the Minority Amid Bullish Sentiment

It has to be noted, though, that while there's a lot to like about Nike, there are some reasons to be cautious. One is the fact that not all analysts are in the bull camp. In the last week of December, the UBS Group team actually reiterated their Neutral rating on the stock. It seems they're in wait-and-see mode with regard to the new management's ability to get the company back into growth mode.

However, their cautious stance was very much in the minority among a run of bullish outlooks from analysts in December, including those at Robert W. Baird, who gave Nike a price target of $105. 

Nike’s Breakout Potential: A Prime Entry Opportunity?

For now, investors should look for the stock to continue building on recent momentum, which has seen the stock gain 10% over the past fortnight. The technical setup is attractive right now and should continue to support any upward direction in Nike shares. They've bounced off a level of support that held last year and which is starting to look like a double bottom, which has created a strong foundation from which to launch a comeback rally.

An RSI of 60 indicates the stock has some bullish momentum behind it and a ton of room to run if things start taking off. For those of us who are happy to lean into the analysts' bullish outlook, this has the makings of a fantastic entry opportunity in what could be one of the better comeback plays of 2025.