Nike is upgraded to buy Jefferies on fundamentals
|Toronto Star 11 May 2021 at 14:26|
Nike (NKE) slid less than the overall market Tuesday as Jefferies upgraded its rating on the sports apparel giant to buy from hold and lifted its share-price target to $192 from $140.
“We have grown increasingly confident in the medium-term growth and profitability trajectory of the business,” Jefferies analyst Randal Konik wrote in a commentary.
That view is based on a “favourable industry backdrop, ongoing success of the modern digitally-enabled customer-led strategy, and a shift to higher growth and margin channels and regions,” he said.
The stock traded at $135.67, down 0.54 per cent, compared to a 1.59 per cent drop for the S&P 500. Nike has soared 51 per cent in the past six months on strong earnings.
“Our new $192 price target represents about 40 per cent upside, as we anticipate a period of sustained earnings momentum,” Konik said. “The $192 target is predicated on 40 times fiscal year 2023 earnings.”
That’s “a peak multiple, but justified by the favourable sportswear market backdrop, … high barriers to entry with low probability of disruption and improved margin profile,” he said.
Last month, Citigroup analyst Paul Lejuez lowered his price target for Nike by $20 to $140 a share, and cut his rating to neutral from buy’, citing March boycotts of several foreign companies by Chinese consumers following comments about the country’s treatment of Uighur Muslims in Xinjiang.