Here’s what bank analysts have to say about surging Nike stock

Shares of Nike Inc (NYSE: NKE) rose to all-time highs this week as investors rushed to price in the recent quarterly reports and a positive outlook.

Fundamental analysis: Bets on digital sales show results

Nike’s online sales skyrocketed more than 80% in the last quarter, suggesting that its big investments in digital businesses are reaping rewards. The number of consumers that are buying Nike’s products online peaked, while the shoemaker has reduced its inventories to decrease its dependence on discounting. 

Nike’s officials believe e-commerce will account for half of its sales later in future. 

“We foresee the shift toward digital being a multi-year sales and earnings driver, supporting the stock’s premium valuation multiple,” said Joseph Feldman, an analyst at Telsey Advisory Group, in a client note.

Feldman lifted its price target for Nike to $175.00 per share from $155.00.

The footwear company’s plans to boost its direct-to-consumer sales are obviously paying off as department stores have been struggling to attract customers lately. 

“Nike’s revenue results were nicely better than peers,” said Simeon Siegel, an analyst at BMO Capital Markets. He believes that Nike will “capitalize on share-taking opportunities amid pandemic dislocations.”

Siegel also lifted his price target for Nike to $160.00 from prior $134.00.

As for its future outlook, Nike believes its revenue will climb by a low-teen percentage in fiscal 2021 year-on-year. Analysts estimated a rise year-over-year rise of 12.3%.

The shoemaker’s profit outlook is also showing positive signs as the Nike plans to ease markdowns on its apparel and footwear going ahead and reduce its wholesale inventory.  

In the quarter to November 30, Nike reported net income of 78 cents per share, with revenue of $11.24 billion, compared to consensus estimates of 68 cents and $10.56 billion. Nike’s online sales tripled in North America and registered double-digit revenue rise in China.  

Similar to BMO and Telsey, analysts at UBS joined the bull camp with a $183 price target.

Technical analysis: Profit taking facilitates a correction

Nike stock price is now trading about 2% higher in December after recording gains of 12.18% in November. The price action rose to hit a fresh all-time high at $147.95, which translates to YTD gains of over 45%.

Nike weekly chart (TradingView)

In the meantime, profit-taking activities from buyers have facilitated a correction to low $140s with intraweekly support located at $137. 

Summary

Nike’s stock moved up over 5% on Monday, hitting a new intraday high thanks to the company’s robust quarterly reports and an optimistic outlook as its bets on digital sales reap the benefits. 

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