Is Nike Stock Poised for a Significant Rebound?

After years of underperformance characterized by declining share prices, inventory gluts, and intense competitive pressure, the sportswear behemoth Nike is attracting renewed optimism on Wall Street. This surge in confidence emerges just ahead of the company's upcoming quarterly earnings report, prompting a critical question: has the stock finally found a bottom, or is this merely a fleeting hope before the downturn continues?

All eyes are on December 18th, the date Nike is scheduled to unveil its financial results for the second quarter of fiscal 2026. While consensus estimates still project a year-over-year profit decline, the investment bank Wells Fargo has adopted a decidedly more bullish outlook. In a notable move, analyst Ike Boruchow upgraded the stock to "Overweight" and significantly raised the price target from $60 to $75.

This shift in sentiment is rooted in fundamental analysis. Following more than three years of consecutive negative earnings revisions, the bank now perceives a light at the end of the tunnel. Visibility concerning both revenue and profit margins has improved, creating a foundation for credible projections of a return to growth within the next six to nine months.

Stabilizing the Core and Fueling New Growth

A central pillar of this optimistic analysis is the state of Nike's "Classics" business, which includes iconic models like the Air Force 1 and Air Jordan. These former revenue powerhouses had recently become a drag on performance due to massive inventory surpluses. Wells Fargo now believes the peak of this pressure has passed.

Should investors sell immediately? Or is it worth buying Nike?

As the decline in the classic segment shows signs of deceleration, the business centered on new product models is already demonstrating positive momentum. According to the analysts, innovations such as the "Vomero" and "Pegasus" lines are posting growth rates exceeding 20 percent. This combination of a stabilizing core business and dynamism in new releases could potentially ignite the long-awaited corporate turnaround.

Lingering Challenges and Technical Weakness

Despite the budding euphoria, significant risks remain. As recently as mid-November, the credit rating agency Moody's downgraded the company's creditworthiness, citing cost pressures from tariffs and ongoing challenges in the critical Chinese market. From a technical analysis perspective, the picture is also far from rosy; the stock is currently contending with a "Death Cross," a classic bearish signal in chart analysis.

This technical weakness is reflected in the stock's performance. Since the start of the year, Nike shares have shed nearly 25 percent of their value, significantly underperforming the broader market. One consolation for patient investors is the company's commitment to its dividend; management recently maintained its payout of $0.41 per share, signaling at least some degree of financial confidence.

The December 18th earnings release is now shaping up to be a pivotal event. Investors will be scrutinizing the results to determine whether Wells Fargo's optimistic forecasts align with reality or if Nike's recovery journey will be more protracted than hoped.