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Nike gets upgrade as analysts see estimates as ‘finally’ achievable

Published 2024-04-11, 12:40 p/m
© Reuters.  Nike gets upgrade as analysts see estimates as ‘finally’ achievable

Proactive Investors - Nike Inc (NYSE:NKE, ETR:NKE) climbed on Thursday after Bank of America (NYSE:BAC) granted the sportswear retailer with an upgrade, arguing “estimates finally look achievable”.

Analysts bumped Nike up from a ‘neutral’ to a ‘buy’ rating, adding the company was “taking bold steps to transform” and that it sat at a ten-year trough in terms of price to earnings.

A new share price target of US$113 was offered by Bank of America, marking a prospective 27% rise on Wednesday’s close.

The upcoming Olympics in Paris, Nike’s first investor day in seven years later in the fall and the potential for further shake-ups were highlighted as catalysts by the bank.

“Nike has historically benefited from the newness and marketing around the Olympics, and we see this year as no different,” analysts said.

“Nike has ramped innovation ahead of the event, and we model accelerating demand creation spending to generate excitement.”

Margin rebuilding will likely take precedence though, according to the bank, given these currently lag behind pre-Covid levels.

“We expect margins to buffer the sales downturn in the near term and for any green shoots to be rewarded,” analysts continued.

“Competition has been fierce, with innovative brands taking share and struggling brands promoting. Nike needs to launch compelling innovation to battle these factors and has committed to faster and more meaningful product launches.”

Bank of America added consensus estimates for 2025 had repeatedly been scaled back over the last two years, estimating itself that revenue growth would sit in the mid to single-digit range for the year ahead.

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Nike shares climbed 3.25% to US$91.89 on Thursday.

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