Nike (NYSE:NKE), the global leader in sportswear, remains a favorite among investors. Recently, Jefferies upgraded Nike stock to “Buy” from “Hold” and raised its price target to $115, implying a 37% upside from current levels. This upgrade reflects growing optimism about Nike’s ability to recover from recent setbacks.
As the company prepares to report third-quarter earnings for fiscal 2025 on March 20, many investors are wondering: Is now the right time to buy? Let’s analyze Nike stock’s forecast, current valuation, and future prospects.
Why Analysts Are Bullish on Nike Stock
Nike’s brand strength remains a major driver of its long-term success. Despite facing recent headwinds, including supply chain disruptions and inflationary pressures, analysts believe these challenges are temporary.
Jefferies highlighted Nike’s new CEO, Elliott Hill, as a key factor in its bullish Nike stock forecast. Hill, who took over in October 2024, has been aggressively addressing product and distribution issues to strengthen the company’s market position.
During Nike’s fiscal Q2 earnings call, Hill emphasized that the company had lost its “obsession with sport” and needed to refocus on its core values. Moving forward, Nike plans to:
- Prioritize innovation based on athlete insights
- Shift from excessive discounting to a premium pricing model
- Strengthen brand storytelling and expand market partnerships
This strategic realignment is expected to enhance Nike’s competitive edge against rivals like Adidas (OTCQX:ADDYY), Under Armour (NYSE:UAA), and Puma.
Nike Stock Forecast: Earnings & Valuation Outlook
Nike reported an 8% decline in Q2 revenue, down to $12.4 billion, with earnings per share (EPS) dropping 24% to $0.78. Analysts project Q3 revenue of $11 billion and EPS of $0.29, marking a significant decline from the previous year’s $12.4 billion revenue and $0.77 EPS.
For the full fiscal year 2025, revenue is expected to drop by 10.4% to $46 billion, while earnings are projected to decline by 47%. However, analysts anticipate a rebound in fiscal 2026, with revenue growth of 1.7% and earnings increasing by 13.5%.
Nike stock currently trades at 38.6 times its projected 2026 earnings, which some analysts consider overvalued. However, long-term investors may see this as an attractive entry point, betting on Nike’s turnaround strategy.
Dividend & Shareholder Value
Nike stock remains appealing due to its shareholder-friendly policies. The company has a forward dividend yield of 2.1%, surpassing the consumer discretionary sector average of 1.89%. With a sustainable forward payout ratio of 53.2%, Nike continues to reward investors through dividends and share buybacks.
As part of its $18 billion repurchase program, Nike spent $1.1 billion on share buybacks in Q2 and paid out $557 million in dividends. Notably, Nike has increased its dividend payments for 23 consecutive years, bringing it closer to S&P 500 Dividend Aristocrat status.
What Does Wall Street Think?
Nike stock holds a “Moderate Buy” rating on Wall Street. Out of 33 analysts covering the stock:
- 16 rate it as a “Strong Buy”
- 1 rates it as a “Moderate Buy”
- 14 recommend “Hold”
- 2 rate it as a “Strong Sell”
The average target price for Nike stock stands at $84.23, representing a 7.4% upside. Meanwhile, the highest analyst target of $120 suggests a potential 53% gain.
Should You Buy Nike Stock Now?
Nike’s ongoing challenges have weighed on its stock, but analysts remain confident in its long-term growth potential. With a renewed focus on innovation, premium pricing, and market expansion, Nike stock could see a turnaround under Elliott Hill’s leadership.
For risk-tolerant investors, current price levels may offer an attractive entry point. However, those seeking more certainty might prefer to wait until Nike’s March 20 earnings report for clearer insights into the company’s financial recovery.
Featured Image: Pexels
