Nike: Recent Struggles Offer an Attractive Opportunity to Invest in Global Sportswear Leader

We rate Nike as very undervalued relative to our $112 per share fair value estimate. Amid one of its most challenging periods in decades, its shares fell nearly 30% in 2024, but we believe new CEO Elliott Hill is making the right moves to bolster its brand value, which is the source of our wide moat rating. Hill's general plan is to invest in the firm's connections to global sports, which we regard as the firm's greatest advantage, while cutting costs elsewhere. In the long run, we think Nike can return to midteens EBIT margins as it increases full-price selling, releases new merchandise, and increases sales in high-margin markets.