By Sabrina Escobar

Nike has a long way to go before it becomes a winning stock again, but Piper Sandler is trying to stay ahead of the curve.

Analyst Anna Andreeva upgraded shares of Nike to Overweight from Neutral on Friday, and bumped up her price target to $90 from $72.

While she recognized that healthy, profitable growth is still three to four quarters away, Andreeva wrote in a research note that new CEO Elliott Hill is taking the right steps.

"While we are possibly early with this call, CEO Elliott Hill's intensified urgency to clean up the marketplace (NKE is taking product back and providing markdown support to partners) should translate to a more visible recovery story entering FY26," she wrote.

Plus, there were some green shoots of progress in Nike's latest earnings report, she added, including improving sales in the sport performance segment.

Andreeva also noted this isn't Nike's first comeback. In 2018, the company's footwear was losing market share and sales came under pressure. By the end of the year, sales rebounded when the company scaled up its innovation -- as it is doing now.

Today, there is even more competition, she acknowledged, with upstarts such as On Holding and Hoka becoming more popular. But history suggests that "when NKE executes, the brand has been able to expand the entire marketplace."

Nike stock was up 1.2% at $72.13 in early afternoon trading Friday. The S&P 500 was down 1.2%.

The company's shares have fallen about 32% in the past 12 months, dragged lower by several quarters of declining sales and market share losses.

With Andreeva's upgrade, a majority of analysts are now bullish on Nike, with 54% of analysts tracked by FactSet rating Nike a Buy. That said, bears remain pretty vocal about their skepticism that a turnaround is near.

Just on Thursday, BNP Paribas analyst Laurent Vasilescu reiterated an Underperform rating on the shares, arguing the company's plans to increase marketing spend -- including through expensive athlete sponsor deals -- would eat away at profit.

"We think the next shoe to drop is the cost structure and as the top line and GM continues to erode," Vasilescu wrote.

Write to Sabrina Escobar at sabrina.escobar@barrons.com

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January 10, 2025 13:41 ET (18:41 GMT)

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