BofA Stays Bearish
Bank of America Merrill Lynch analyst Robert Ohmes reiterated an Underperform rating on Nike with a $55 price target.
Although Nike wholesale sales were up 9 percent and direct-to-consumer grew by 14 percent in the second quarter, Ohmes said he expects Nike sales and earnings growth to decelerate due to market share pressures and intensifying competition.
“We see downside to NKE’s current P/E multiple given market share pressure in the U.S. and difficult international comparisons, which offset strong direct-to-consumer momentum and strength in China."
Baird: Valuation Too High
Baird Equity Research downgraded Nike from Outperform to Neutral and lowered the price target from $87 to $82, arguing that while Nike's business does not face a harsh threat, its valuation is overstretched.
Cowen Projects Gross Margin Inflection
Cowen analyst John Kernan held steady on Nike, maintaining a Market Perform rating with an $80 price target.
Nike’s gross margin guidance could be conservative, the analyst said.
“We believe direct-to-consumer expansion and NKE’s manufacturing revolution could create a multiyear inflection in gross margin past prior peaks to reach $4.75-plus in EPS potential through FY23E."
Nike could return $24 billion to shareholders over the next five years through share repurchases and dividends, Kernan said.
The Price Action
Nike shares were up 0.24 percent at $76.61 at the time of publication Friday.
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Photo courtesy of Nike.
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