NIKE, Inc. (NKE): A Bull Case Theory

We came across a bullish thesis on NIKE, Inc. on Valuations’ Substack. In this article, we will summarize the bulls’ thesis on NKE. NIKE, Inc.'s share was trading at $64.38 as of January 19th. NKE’s trailing and forward P/E were 37.65 and 41.32, respectively according to Yahoo Finance.

Nike (NKE) is widely regarded as the most iconic apparel and footwear brand globally, commanding dominant market positions across basketball and running, with 85% share in basketball footwear and 65% of NBA players wearing its products. The brand’s aspirational power, fueled by athlete endorsements and iconic designs like the Air Jordan, Air Force 1, and Dunk, has created a flywheel of cultural relevance and sales.

However, strategic missteps under former CEO John Donahue, including overreliance on digital direct-to-consumer channels, neglect of wholesale partners, product concentration, and over-inventory, combined with macro headwinds in China and tariffs, led to a sharp 70% decline in shares, marking a trough in performance by late 2024.

Under CEO Elliott Hill, Nike is executing a “Win Now” turnaround, refocusing on sport at the center of its culture, reorganizing teams by sport, rightsizing key franchises, and innovating product portfolios with athlete-driven insights. The company is rebalancing its wholesale and digital channels, restoring bold marketing campaigns, and embedding community-level engagement to reinforce brand loyalty. Early signs of recovery are evident: wholesale revenue is trending back to 60%, running segment growth hit 20% in Q1 2026, and inventory has begun to normalize.

Nike’s Q4 2025 trough sets up easy comparisons, and the new product cycle could generate $4 EPS in FY28, implying a 15x multiple today and 61% upside to $100 per share, with a more conservative scenario pointing to $80 per share. Even using discounted cash flow analysis with normalized growth, fair value ranges around $82, offering 31% upside.

Key catalysts include new product success, wholesale shelf reclamation, China revenue recovery, and margin improvement. With strong fundamentals, a durable moat, and limited downside, Nike presents a compelling long-term investment opportunity, blending growth, scale, and cultural dominance.

Previously, we covered a bullish thesis on NIKE, Inc. (NKE) by Any_Chocolate6194 in May 2025, which highlighted Nike’s cultural integration, Elliott Hill’s leadership return, and recovery potential amid subdued market sentiment. NKE’s stock has appreciated by approximately 3.7% since then. Valuations’s Substack shares a similar thesis but emphasizes the “Win Now” turnaround, product cycle catalysts, and detailed upside to $100 per share.

NIKE, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 89 hedge fund portfolios held NKE at the end of the third quarter which was 81 in the previous quarter. While we acknowledge the potential of NKE as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.