Over the past few years, the narrative in athletic retail wasn’t particularly favorable for the industry’s largest player, Nike Inc (NYSE:NKE).

Adidas AG/S ADR (OTCMKTS:ADDYY) was leveraging lifestyle and retro trends to grow brand relevance globally. And it worked. Adidas revenue growth turned red-hot. Nike revenue growth went ice-cold.

And NKE stock fell flat. Over the course of two years — from late-2015 to late-2017 — NKE stock did nothing but grind lower,  from $65 to $50.

But over the past several months, the narrative in athletic retail has flipped in dramatic fashion. It is now exceedingly favorable for Nike. Through its Consumer Direct Offense initiative, Nike is taking all of its resources and fighting back against Adidas and other red-hot insurgent athletic apparel companies. It is pushing direct sales channels, streamlining investment into global cultural centers, accelerating product innovation, and creating lifestyle products with broad reach.

The sum of these actions has led to a huge turnaround in Nike, which has sparked a run in NKE stock from $50 to $75 in a hurry.

Can the rally continue?

I’m skeptical. I love Nike, the company and the products. But as for the stock, it is tough to justify the current $75 price tag. It seems like Mr. Market is perhaps overly optimistic regarding Nike’s growth prospects over the next several years.

As such, NKE stock looks risky here and now.

Here’s a deeper look:

Nike’s Growth Narrative Is Improving

There is no doubt about it. The Nike growth narrative, which was plagued by rising competition for several years, is now dramatically improving.

Look no further than the attached chart for proof. Nike’s global search interest growth has coming roaring back recently after years of declining. Meanwhile, Adidas has cooled off by a ton, and Under Armour Inc (NYSE:UAA) search interest remains weak. In other words, Nike is surging in global consumer interest at a time when its main competitors are struggling. 
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That is a favorable set-up for outsized growth over the next several years.

There are also multiple growth catalysts in the mix which should create near- to medium-term tailwinds for the business. The World Cup has started, and that always creates a lift to athletic apparel companies. Nike is outfitting 10 of the 32 teams involved in the World Cup, so Nike has sufficiently broad exposure.

Meanwhile, NBA superstar LeBron James is entering free agency this summer, and that will certainly generate a lot of buzz surrounding the Nike brand. Nike’s other big NBA guy, Kevin Durant, just won the Finals MVP, and that should translate into higher Durant shoe sales.

Elsewhere, Nike just signed a long-term extension with the NFL and is in the works to steal the MLB uniform deal away from Under Armour. Both of those moves inevitably grow Nike’s mind-share in the football and baseball markets, where Nike has less reach than in the basketball market.

Overall, this growth narrative is really good right now, and projects to only get better over the next several years.

But NKE Stock Is Already Priced for These Improvements

But the time to buy Nike stock was when it wasn’t priced for this big growth turnaround.

That was back in September/October 2017, when this was a $50 stock trading at 20-times earnings, versus a 200-day moving average of $55 and a five-year average forward earnings multiple of 24. Today, NKE is a $75 stock trading at over 28-times forward earnings, versus a 200-day moving average of $63 and a five-year average forward multiple of 24.

In other words, NKE has gone from a stock that was trading well below historically normal levels and at a big discount to historical valuation, to a stock that is presently trading well above historically normal levels and at a big premium to historical valuation.

Because of this, the time to buy is almost certainly not now. Expectations are big. Too big. And while the fundamentals are improving, the risk-reward on Nike stock is unfavorable at $75.

Bottom Line on NKE Stock

Nike is back. But the stock has had its run. At present levels, valuation is a problem, and any hiccup in the growth narrative could result in a big sell-off.

As of this writing, Luke Lango did not hold a position in any of the aforementioned securities.