Piper Sandler Raises Nike Price Target Ahead of Earnings
Jacques Potts and Alex Moreno
Nike is a well-known brand with loyal customers. It offers strong and diverse footwear options that result in high customer satisfaction with popular standards, compelling newness, and Jordan brand heat, which causes Nike to continue gaining shares. In addition, although some stores have reopened, Nike’s eCommerce business strongly positions Nike to capture more of the market.
Analysts at Piper Sandler believe that Nike’s brand strength in China, along with accelerating relevance in the secondary market, and strong sales trends at outlets such as Foot Locker and Dick’s Sporting Goods point to further upside.
As a result, the analysts raised their estimates on Wednesday, ahead of next week’s quarterly release (on Tuesday, September 22nd, after the close) and increased their price target to $130 (from $112), commenting that “longer-term, [they] are bullish on the significant margin benefits of Nike's digital business which alone could drive corporate EBIT margins to the mid-teens range by FY23.”
Regarding expectations for the release, the analysts added: “We'd expect management to clarify their initial framework for FY21 on this call. While we are still expecting mgmt to speak to a sales decline in Q2 (albeit better than Q1), we believe China & digital alone could help support sales for the year to be 'at least flat' (current guidance is 'flat'). While we expect inventory to improve from the +31% Y/Y growth in Q4, it will likely still look dislocated from sales through Q2”.
Price target hikes ahead of a quarter speak to analyst conviction. So, is Nike going to continue to rise in the future? Let us know your thoughts on Nike’s future prospects in the comments below!
Disclosure: At the time of publication, we have no positions in any of the securities mentioned in this article. We wrote this article ourselves, and it expresses our own opinions. We are not receiving compensation for creating this article (other than from TheStreet) and have no business relationship with any company whose stock is mentioned in this article.