Nike Shares Jump After Ackman’s Pershing Square Builds Stake
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Nike Shares Jump After Ackman’s Pershing Square Builds Stake

Story Highlights

Nike stock rallies after Bill Ackman’s Pershing Square builds its stake in the company. The move reflects Ackman’s bullish outlook on NKE stock.

Shares of sportswear giant Nike (NKE) gained 3.3% in after-hours trading yesterday. The upside came after Bill Ackman’s Pershing Square Capital Management acquired a stake in the company during Q2. Per the latest 13F filing, the investment firm bought 3 million shares, valued at $229 million.

It’s worth noting that Ackman had previously bought a stake in Nike in late 2017. However, he exited the position with a $100 million profit the following year.

Interestingly, Ackman’s recent investment comes amid Nike’s ongoing challenges with slowing sales growth and increased competition. The stock experienced a significant sell-off on June 27, declining 20% after a disappointing revenue forecast for the current fiscal year.

Other Portfolio Adjustments

Alongside its investment in Nike, the firm acquired a stake in investment management company Brookfield (BN) of nearly 7 million shares, worth $285 million, at the end of the second quarter.

Meanwhile, Pershing Square decreased its stakes in several existing holdings. The firm reduced its position in long-time investment Chipotle Mexican Grill (CMG) by 23% and trimmed its holdings in Alphabet’s Class A (GOOGL) and Class C (GOOG) shares.

What Is the Outlook for NKE Stock?

Nike’s focus on expanding its direct-to-consumer business and managing inventory levels is encouraging. Further, its efforts to innovate new products and implement cost-cutting measures could bolster its performance. However, intense competition in the retail sector continues to be a key concern.

On TipRanks, NKE has a Moderate Buy consensus rating based on 14 Buy, 16 Hold, and two Sell recommendations assigned in the past three months. The analysts’ average price target on Nike stock of $92.56 implies 17.88% upside potential. Shares of the company have declined 25.4% in the past six months.

See more NKE analyst ratings

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