Nike's coming earnings could be a catalyst for the athletic sector as a whole.
David Paul Morris/BloombergNike will report fiscal third-quarter earnings after the close on Thursday, and the athletic-wear giant’s stock scored yet another price target increase ahead of the report, this time from Cowen & Co.
Analyst John Kernan reiterated an Outperform rating on Nike (ticker: NKE) on Wednesday, while raising his price target to $173 from $170. He argues that concerns about ongoing store closures in Europe and supply disruptions in North America are overblown, and that strength in digital sales and in China will remain strong drivers.
Kernan boosted his third-quarter earnings-per-share estimate to 82 cents, ahead of the 76-cent consensus, and his full-year EPS outlook to $3.19, compared with the average analyst estimate of $3.03. He argues that the Street is underestimating Nike’s rebound in the fiscal fourth quarter, as the company moves past the first anniversary of major Covid-19 disruption and delivers strong sales across the globe.
He believes that sales in China could climb by some 30%, and that Nike’s direct-to-consumer division sales could be up 24% year over year. He is especially optimistic about Nike’s DTC efforts, as they allow the company greater access to valuable data and the chance to offer consumers more high-margin personalization options.
He notes that Nike’s earnings, along with the latest round of government stimulus and the slowly reopening economy, could be a catalyst for the athletic sector as a whole.
Kernan isn’t alone in his enthusiasm about Nike, as numerous analysts have weighed in ahead of the report and in some cases raised their price targets, even if foot traffic may have weakened in recent weeks.
Nike stock is up 0.3%, at $145.03, in recent trading, while the S&P 500 is down 0.4%. The shares have gained 113% in the past 12 months, and are up 2.5% since the start of the year.
Write to Teresa Rivas at teresa.rivas@barrons.com
March 17, 2021 at 09:57PM
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Nike Gets a Higher Price Target Before Earnings - Barron's
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