Nike’s Turnaround: If the Shoe Fits, Buy It!

Key Points

• Nike's Q1 results reveal signs of progress linked to its turnaround process.
• The analysts' response to the news is bullish, indicating a rebound in sentiment.
• Institutional buying is robust in 2025 and provides a solid support and tailwind for market action.

Nike’s NYSE: NKE turnaround has been brewing for several quarters and may now be at hand. The FQ1 report revealed green shoots despite ongoing headwinds and aligns with an outlook for additional improvement, a return to growth, and a rebound in share prices. The question is whether the rebound is sustainable and if the stock is a good buy in October.

Nike’s Win Now plan has the business returning to its roots. The plan focuses on the core markets: North America, wholesale, and Running. The green shoots are most visible in the product mix, which includes a 7% increase in wholesale sales offset by a 4% decline in direct sales. 

The only bad news is that wholesales come with narrower margins, as also seen in the report; however, this is a more sustainable margin and one sufficient to sustain financial health and capital returns. Capital returns in 2025 include a 2.3% dividend yield, a positive outlook for distribution growth, and share buybacks.

Nike’s Turnaround Exceeds Expectations in FQ1

Nike had a decent Q1 with revenue growing by nearly 1.0% and outpacing MarketBeat’s reported consensus by 650 basis points. The strength was driven by the core Nike brand, which grew by 2% to offset a 27% contraction in Converse sales. Converse sales were reported to be weak across all markets. Nike brand sales were mixed, but footwear sales declined by only 1%, offset by a 9% increase in Apparel and a 4% gain in Equipment. 

The margin news is also mi

xed, with the gross margin contracting by more than 300 basis points. The offsets include the impact of discounts and tariffs, as well as the channel mix, and an expectation for margin recovery over time. The net result is adjusted EPS of 49 cents, which nearly doubles the consensus target, and optimistic guidance that may be viewed as ultra-cautious. The company is forecasting a revenue decline for Q2, cautioning that its revenue, margins, and regional strengths will recover at different paces, resulting in a lumpy recovery on its path to 20% running-business growth.

Analysts' Sentiment Aligns With Nike’s Bottoming Process

The analyst sentiment trends align with Nike’s bottoming process. The group of 33 tracked by MarketBeat rates the stock as a Moderate Buy with bullish bias. The bullish bias is significant, with 70% of the ratings pegged as Buy, no sell ratings, and sentiment firming over the past two quarters.

The consensus price target is also significant, rising in early October after having trended lower for several quarters, indicating a rebound in sentiment is underway. 

The first revisions tracked by MarketBeat align with the rebound, including comments to the effect that the Q1 report is a relief, showing strengths in key areas, with positives outweighing the negatives. The consensus is that this company is on track to regain business momentum and create shareholder value over time.

Keybanc analyst Randal Konik says the firm would aggressively buy at early October valuations. Institutions are likewise buying aggressively, accumulating shares at a pace of approximately $2 to $1 versus sellers in each of the first three quarters of 2025.

Nike Stock Is Bottoming in 2025

Nike’s 2025 price action aligns with a market bottom. The stock price advanced by 5% following the FQ1 earnings release and is on track to retest long-term highs soon. A move to new highs aligns with a Head & Shoulders pattern, creating the second shoulder, setting the market up for a move to new highs.

In this scenario, the NKE stock price could advance to the $90 range by year’s end and potentially rise higher over the longer term as turnaround efforts gain momentum.