Analyst John Kernan from TD Cowen maintained a Buy rating on Nike and increased the price target to $85.00 from $62.00.
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John Kernan has given his Buy rating due to a combination of factors that highlight Nike’s potential for a strong turnaround. Firstly, Nike is recognized as an iconic global brand with significant potential in earnings per share and free cash flow, despite currently being at trough margins. The new management team is seen as a catalyst for improved execution, and there is a positive outlook on data trends indicating potential margin recovery that is not fully appreciated by consensus estimates.
Additionally, proprietary research indicates improvements in Nike and Jordan brand trends, particularly in footwear and apparel. The decline in brand momentum and digital engagement among competitors like New Balance and Adidas suggests room for Nike’s growth. Kernan anticipates a return to sales growth and an improvement in EBIT margins, with projections exceeding consensus estimates. Despite concerns about valuation, Kernan believes that improved marketplace and inventory management will drive earnings revisions, making Nike a compelling buy opportunity.
In another report released yesterday, Bernstein also maintained a Buy rating on the stock with a $90.00 price target.