Nike shares set to hit record high as outlook beats expectations

Pedestrians walk past the American multinational sportswear brand, the Nike store and its logo seen in Hong Kong.

Budrul Chukrut | LightRocket | Getty Images

Nike shares jumped more than 13% on Friday morning, about to open at an all-time high, after the sneaker maker forecast annual sales topping $ 50 billion as its North American business rebounds after the troughs of the pandemic.

And in Greater China, sales appear to be improving, with Nike management saying the company is confident in its ability to regain the trust of customers there, amid threats to boycott Western brands over their comments. expressing concern about the alleged forced labor in Xinjiang.

“These are times when strong brands can get stronger, and each quarter that reality becomes even clearer,” Nike CEO John Donahoe said on a conference call Thursday night.

Globally, Nike is seeing shoppers splurging on new trendy sneakers and tracksuits to wear as more people start to socialize again. The company’s Jordan brand has been particularly brilliant.

During the three-month period ended May 31, Nike’s total revenue nearly doubled to $ 12.34 billion from $ 6.31 billion a year earlier, beating Wall’s estimates. Street over $ 1 billion. In North America, Nike’s largest market, sales more than doubled to a record $ 5.38 billion.

Nike, which has a market cap of over $ 211 billion, saw its stock hit a record high of $ 147.95 on December 21.

Following Nike’s optimistic fourth quarter results Thursday afternoon, Cowen & Co. analyst John Kernan raised his price target to $ 181 from $ 145. Kernan said he sees a way for Nike’s market cap to someday exceed $ 300 billion.

“Management confidence is at an inflexion and the fourth quarter results indicate the digital acceleration of the financial model,” he said in a note to clients.

According to Cristina Fernández, analyst at Telsey Advisory Group, Nike benefits from its closer relationships with its customers through its membership program, higher full-price selling, greater data usage and a more wholesale model. smart with strong partners like Foot Locker.

Telsey raised his price target on Nike shares to $ 180 from $ 160.

“The strong momentum of the Nike brand globally more than offsets the pressure in China and supply chain constraints,” Fernandez said in a note to customers.

At least 12 brokerages have already raised their price targets for Nike shares, following the company’s fourth-quarter tax release.

According to FactSet, the median target price for analysts who cover the company is now $ 176.90.

“The company comes out of the Covid era in the biggest P&L shifts in our hedging universe,” Credit Suisse analyst Michael Binetti said.

Nike guarantees “a significant valuation premium” over other global brands of clothing and footwear, he added.

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Gail Mena

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