ANALYSISNew York – The market sees potential for Nike (NKE) after the stock went through an initial crash at the beginning of the coronavirus pandemic. Now, the athletic apparel company’s shares are back to all-time highs.
“Nike is in the early innings of a massive digital transformation” that is much more profitable in the U.S. than its wholesale model, according to Cowen’s analyst John Kernan. There’s consensus within the analysts covering the stock on that Nike’s direct-to-consumer efforts (the brand is reported to cut commercial ties with nine retailers in the next weeks) mean that its fortunes are less tied to declining mall brands.
On a related note, Hari Ramanan, chief investment officer of Research Funds at Neuberger Berman said recently that Nike has done better than competitors at keeping prices high online, maintaining its premium pricing power, even as competitors are sometimes forced to discount their goods. Per Neuberger’s proprietary analysis, Nike’s average revenue per user is 40 percent higher on digital channels than in the store.
Market sees Nike stock’s long-term growth at 20 percent
Analysts still see the company’s long-term growth rate hovering above 20 percent. According to Susquehanna International Group (SIG) analyst Sam Poser, Nike's (NKE) decision to no longer sell to 9 multi-branded wholesale accounts is positive for the company as it “takes control of more of its own destiny.” Poser has a Positive rating and a 150 dollars price target on the stock.
In the latest trading session, Nike (NKE) closed at 111.83 dollars, marking up 1.9 percent from the previous day and outpacing the S&P 500's daily gain of 1 percent. Furthermore, Yahoo Finance data shows that shares of the athletic apparel maker had gained 11.65 percent over the past month, outperforming the Consumer Discretionary sector's gain of 4.03 percent and the S&P 500's gain of 4.48 percent in that time.
The sports apparel company is expected to report earnings per share (EPS) of 0.41 dollars, down 52.33 percent from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of 9.05 billion dollars, down 15.09 percent from the same period a year ago.
Photo: Official site, Nike