By Senad Karaahmetovic
Nike (NYSE:NKE) is still the world's strongest athletic wear brand, UBS' survey shows. The company is also seen as the No.1 coolest brand, best for doing sports, and having the best selection.
UBS analysts said the results showed a widening lead for Nike, while the Jordan brand also scored really good on the survey. For instance, Jordan is ranked as the world's most prestigious athletic wear brand, in front of Nike.
"A pivotal question around Nike is if the brand can recover from the March 2021 boycotts. Three stats suggest the answer is yes: 1) Nike's Net Promoter Score was #1, improving 1045 bps y/y to 40% and reversing almost all of last year's decline. 2) Nike's China NTM footwear purchase intentions score rebounded to 51%, up 730 bps y/y. Plus, this score was the highest of any brand. 3) 61% of Chinese survey respondents said they have a more favorable impression of Nike y/y. This number jumped 2270 bps vs. LY," the analysts wrote in a client note.
The analysts conclude that Nike's direct-to-consumers (DTC) strategy is working. As a result, they reiterated a Buy rating and a $141 per share price target.
HSBC analysts are more cautious on Nike as they cut the price target to $100 from $118 per share while reiterating a Hold rating.
While valuation "is not too punchy," the analysts are concerned about the "significant margin pressure linked to over-supply, FX, and a higher WACC." Their estimates are also below consensus.
"Despite having decent implied upside, we maintain a Hold rating as volatility and risks remain important for this story in our view. Nike's recent guidance downgrade and the recent USD move are unlikely to bode well across the industry as Nike sets the tone as the, now, undisputed leader. With current circumstances, shares look close to fair value but for now, the group is not seeing a deterioration in demand, presenting issues as mostly supply-driven. That could be the next shoe to drop," the analysts said to clients.
Nike shares closed 1.24% lower yesterday.