This year has been defined by a tech rally and most Dow Jones stalwarts have been excluded from the uptick. Take Nike (NYSE:NKE) for instance; the shares sit 4.5% into the red year-to-date. However, heading into the athletic apparel giant’s FQ4 (May quarter) results, Oppenheimer analyst Brian Nagel notes that this lack of momentum could play into the stock’s hands.
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“Overall,” said the 5-star analyst, “as we consider this week’s forthcoming quarterly announcement from NKE, we are optimistic that a combination of now downbeat investor sentiment and prospects for still solid underlying trends should position shares well for potential “pop-higher” near term, all the while helping to create a stronger foundation for continued gains, over the next several months.”
Nike will deliver its latest print once trading comes to a halt on Thursday (June 29) and Nagel has a conservative EPS forecast of $0.62 vs. the Street’s expectation of $0.68. This is based on the company notching sales growth of flat-to-+2%, similar to the guide.
Looking toward to FY24, Nagel is looking for EPS of $3.76, amounting to growth of 18% and also below the Street at $3.91. Nagel is factoring in total sales growth of 7-9%, at the bottom end of the long-term guide for high-single-digit to low-double-digit growth.
Numbers aside, Nagel makes the case that several developments bode well for the swish machine. Comments made by Dick’s Sporting Goods and Academy Sports and Outdoors have implied that as supplies have improved, there has been “continued solid underlying demand” for Nike products.Management has also recently pointed to improving inventories within the supply chain. Additionally, Nagel believes the recent sales and profit issues seen at Foot Locker are more company-specific rather than a reflection of wider problems in the industry. Lastly, other leading brands, such as lululemon have talked of “underlying, strengthening consumer activity in China.”
So, down to business, what does it all mean for investors? Nagel reiterated an Outperform (i.e., Buy) rating along with a $150 price target, suggesting the shares will climb 33% higher in the months ahead. (To watch Nagel’s track record, click here)
Most analysts agree with Nagel’s assessment. Based on 18 Buys, 3 Holds and 1 Sell, the stock claims a Strong Buy consensus rating. The average target currently stands at $132.19, making room for 12-month returns of 17%. (See Nike stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
