The stock is up 26% year-to-date, outpacing the S&P 500's yearly gain of 25%.
But "As a result of rolling forward our discounted cash flow, we revise our bull, bear, base and price target values upwards," wrote Morgan Stanley analyst Kimberly Greenmberger in a note. She moved her price target up to $118 from $108, with the new price target reflecting another 26% upside for the next year. She's now factoring in 2020 earnings per share estimates. She noted that strong digital sales, which is part of Nike's higher margin direct-to-consumer business, is driving market share gains in athletic apparel globally. This is a huge part of Nike's solid EPS growth expected for 2020.
But this all reflects something about Nike shares, which some bears may say are high-priced right, at 31 times consensus 2020 estimates.
Analysts are looking for EPS growth for the next few years of roughly 15% to 20% for the next several years. If Nike can continue proving that it's executing its long-term goals, a sustain stock performance of 15% per year or more isn't unreasonable for a few years. Greenmberger is particularly bullish, assigning a 2020 earnings multiple of 39 to a 2020 EPS estimate of $3.02.
Nike checks a lot of boxes as a global retailer. It has gone digital successfully and mitigated tariffs by shifting some of its supply chain.
Of course, two core threats are slowing -- or even deteriorating -- consumer spend around a decelerating global economy and the faint possibility of an escalated trade war between the U.S. and China.
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