Athletic wear maker Nike (NKE) joined a wide array of companies that saw their stocks increase on Monday. The catalyst behind this rally was President Donald Trump reaching a trade agreement with China. The deal will lower tariffs between the U.S. and China by 115%, reducing U.S. tariffs on Chinese goods from 145% to 30%, and China’s tariffs on U.S. goods from 125% to 10%.
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However, this trade deal is only temporary and will last for 90 days. During this time, the leaders of the world’s two largest economies intend to continue negotiations. This could lead to a more permanent agreement, which would likely be another positive catalyst for stocks hit in the trade war, NKE included.
How Does the Trade Deal Affect NKE Stock?
Nike produces a large portion of its goods in China, making it vulnerable to the impact of tariffs. This would increase its cost of production, which the company would likely pass on to U.S. consumers via higher prices. With this new trade agreement, Nike can avoid price increases for the next few months, and could do so for longer if another deal is reached.
Four-star Barclays analyst Adrienne Yih covered NKE stock today. Despite the trade war update, she reiterated a Hold rating for the company’s shares and lowered her price target from $70 to $60, representing just a 2.92% upside for the stock.
NKE stock jumped 6.69% on Monday morning, but remains down 17.39% year-to-date.
Is NKE Stock a Buy, Hold, or Sell?
Turning to Wall Street, the analysts’ consensus rating for Nike is Moderate Buy, based on 14 Buy and 15 Hold ratings over the past three months. With that comes an average NKE stock price of $77, representing a potential 23.66% upside for the shares.
