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Nike stock at one of its best entry points in 20 years: Top-rated analyst

A Nike shoe is displayed in a window at a Nike store in San Francisco.
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Nike shares rebounded nearly 4 percent on Wednesday, after Wall Street had a chance to digest the mixed fiscal fourth-quarter earnings results it released after markets closed Tuesday.

Yet with the stock still down more than 11 percent this year, one top-rated analyst said the pullback reminds him of a 2012 scenario, which turned out to be "one of the best, nonrecession entry points for the stock in the last 20 years."

That opportunity came when inflationary pressures caused Nike to "repeatedly" miss earnings estimates, causing investors to question its pricing power, according to Omar Saad, an analyst at Evercore ISI.

"Although the market is unlikely to reach consensus on the key controversies surrounding Nike shares ... for another couple quarters, we would be buyers of the stock on weakness," he said.

"Not only do we believe that recent mishaps are now largely in the rearview mirror, but we were encouraged to hear management's confidence that North America will return to growth in [the fiscal first quarter] and then accelerate throughout the rest of [fiscal year 2017]," he said.

Saad is ranked in the top 10 percent of all Wall Street analysts, according to TipRanks. He averages a 16 percent return on his recommendations.

'Upside opportunity' in Nike

Investors initially balked at Nike's fourth-quarter results, which beat by a penny on the bottom line but fell short on revenue. Wall Street was likewise concerned by softer-than-expected growth in the company's future orders, which refer to orders placed by wholesale customers that were not delivered during the quarter.

Questions also remain about how much the U.K. decision to exit the European Union will hurt the athletic apparel and footwear maker, as Europe accounts for roughly a quarter of its revenue.

Any headwinds experienced in the aftermath of Brexit would be in addition to a confluence of issues Nike is up against. Those include a strengthening base of competitors, namely Lululemon, Adidas and Under Armour; industrywide concerns about a slowdown in the basketball business; and elevated inventories.

Indeed, not all analysts were as bullish on Nike. Morgan Stanley analyst Jay Sole on Wednesday reiterated his equal-weight rating on the stock, saying "headwinds could persist longer than the market expects."