Nike (NKE) investors have endured a brutal stretch. The stock is down over 18% year-to-date and has lost 65% of its value since November 2021. 

Over the past decade, shares have been essentially flat, down 2% for the period – showcasing a stunning underperformance while the S&P 500 Index ($SPX) has repeatedly pushed to all-time highs.

Yet BTIG analyst Robert Drbul just named Nike his top pick for 2026.

"We believe fundamentals will continue to improve over the next year," Drbul wrote in a recent bull note. "While the stock has bounced from the lows, we would note that the stock is still down YTD."

The question isn't whether Nike stock has struggled – it clearly has. 

The real question is whether the market has already priced in the worst, and whether Nike's transformation from growth story to mature dividend payer creates an opportunity most investors are missing.

Nike is No Longer a Growth Stock

For most of its history on the stock exchange, Nike commanded a premium valuation. Investors paid up for strong margins, impeccable brand recognition, and global scale across footwear and apparel. During the pandemic, the company's direct-to-consumer (DTC) business thrived as buyers moved online.

That momentum didn't last. Nike's DTC push couldn't offset weakness in wholesale, and the company's product mix hasn't resonated with cost-conscious consumers. 

The result: price cuts, margin compression, and innovation challenges. Revenue in fiscal Q1 2026 grew just 1% year-over-year to $11.7 billion, and weak results out of China also helped smack the stock lower. 

The bear case is straightforward. Nike is losing market share to specialty brands like Hoka and On Cloud. New tariffs are expected to add $1.5 billion in costs this fiscal year. China sales remain under pressure. Management expects Q2 revenue to decline slightly (a period that includes the crucial holiday shopping season).

Despite the selloff, NKE stock still trades at 36 times trailing earnings, which looks expensive for a company in turnaround mode. 

But that multiple tells only part of the story.

The 2026 Case for Nike

Analyst consensus gives Nike a "Moderate Buy" rating and an average 12-month price target of $76.60, representing an optimistic 25% upside from today's price. 

BTIG's Drbul isn't alone in his optimism as Jefferies maintains a $110 price target, citing Nike's market position and brand strength, going so far as to call the stock a “sleeping bear” that’s about to awaken. Bernstein sees NKE stock reaching $85, while Goldman Sachs, Bank of America, and RBC Capital all carry “Buy” ratings with targets in the $73-$85 range.

While the company’s revenue and EBITDA performance have been choppy — sometimes positive, sometimes negative — Nike's dividend has grown steadily. The company has paid dividends for 40 consecutive years, with a three-year average dividend growth rate of 10.15%. 

The current yield of 2.7% might not seem remarkable, but what matters is what it signals: Nike isn't cutting its dividend despite obvious challenges, and the payout ratio of 94% reflects depressed near-term earnings rather than structural weakness. 

Companies in genuine financial distress cut dividends, but Nike is raising them, which is evidence of a healthy financial infrastructure beneath the struggling top-line results. It also shows that management believes the business can support higher shareholder returns even as it invests in the turnaround.

Know what you're buying.

Peter Lynch famously advised investors to "buy what you know," but with Nike, the more useful heuristic is: “know what you're buying.” 

Investors aren’t buying a growth company anymore, but rather a mature sports and lifestyle brand with infrastructure that most competitors can't match – direct relationships with consumers, partnerships with top athletes and leagues, and a portfolio anchored by two of the most recognizable brands in the world: Nike and Jordan.

Yes, Nike hit several walls as it diversified too much, ignored its core customers, and expanded into China without fully accounting for geopolitical risks. 

However, these aren't existential threats to a brand that still commands immediate mental real estate in consumers' minds. 

The company is refocusing through its "Win Now" strategy, returning to its strengths in running, basketball, football, and training while cutting costs, improving supply chains, and revamping its product portfolio. 

While this isn't a sexy strategy, and it's not guaranteed to work on any particular timeline, Nike's brand equity gives management room to execute a turnaround that weaker competitors simply don't have.

Ultimately, Nike offers investors something increasingly rare in today's market: a blue-chip brand that’s trading at a meaningful discount, paying a growing dividend, and backed by infrastructure that gives management multiple paths to recovery.