Shares of Nike jumped 4.94% on Monday after a Jefferies report highlighted the potential for the stock over the next 12 months with a base case for a 50% gain and an upside scenario of +83%. Analyst Randal Konik upgraded his rating from hold to buy and made Nike his current favorite pick.
On Monday, Nike was the best-performing stock in the Dow Jones Industrial Average and posted the third-best gain among S&P 500 members.
Nike investors have taken their lumps over the last couple of years. In 2024, the stock was the second-worst performer among the 30 components of the Dow with a 30% drop. Its 7.2% decline the prior year made it the third-worst stock in the Dow.
“After a few years of challenges and self-inflicted wounds, we believe new leadership will improve product direction and re-establish balance between DTC and wholesale,” Konik wrote. “As channel inventories rebalance along with improved product direction and execution, we believe a substantial earnings recovery will ensue over the coming two years. With shares near a valuation trough, we believe now is the right time to aggressively buy shares.”
In October, Nike veteran Elliott Hill returned to the company to replace CEO John Donahoe. Konik says Hill is “tackling product and distribution issues head-on,” and that he is setting the company to take back lost share. Job listings for product positions have jumped from 1% of monthly listings to 10% currently, according to Jefferies. Konik says Hill is “intimately engaged” with current and lapsed partners.
Last week, Nike announced a partnership with Kim Kardashian’s shapewear company Skims for a line of activewear for women. It helped trigger a $6.7 billion increase in the company’s market value. NikeSkims is set to launch this spring. Konik thinks it could “revolutionize the activewear market” and will drive margin upside for Nike.
Nike’s stock closed at $80.28 and is up 6.1% year-to-date.
