Piper Jaffray Says Nike Now Worth $115/Share

In a report published Wednesday, Piper Jaffray analysts upgraded the rating on Nike, Inc (NYSE: NKE) from Neutral to Overweight, while raising the price target from $101 to $115. Piper Jaffray's Teen Survey highlights market share gains for Nike."The single biggest take away from the survey is that athletic, as a category, continues to make new highs and NIKE is leading the charge," the analysts wrote. The Taking Stock With Teens survey indicated that Nike "remains the dominant clothing brand among all teens" and that the company gained market share y/y among males and females across both income segments. Among upper-income teens, fashion athletic brands account for 28 percent of preferred clothing and Nike alone was at 24 percent. This marks a jump from the 19 percent share indicates in last year's Spring survey. In the report Piper Jaffray noted, "Importantly, NIKE's mindshare of female athletic clothing grew 600 bps Y/Y to 70% vs. 64% in fall. Recall, the company plans to grow women's from $5B in FY14 to $7B in FY17. NIKE's share as a preferred footwear brand moved up 300 bps seq. among upper-income teens and was flat seq. with avg-income, both capturing 46% share." Although investors are aware of gross margin drivers, like the company's ongoing DTC and international mix shift, the analysts believe that "incremental pricing power and manufacturing efficiencies will prove stronger than expected over time." The survey also indicated that running and soccer are gaining popularity, while suggesting a slowdown in basketball. From a wholesale perspective, Nike's running and soccer categories stand at 19 percent and 11 percent, respectively, while basketball is at 13 percent. The analysts expect basketball to continue to strengthen in Europe and China.