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Macro Volatility Creates Entry Point For Nike, Susquehanna Upgrades To 'Positive'

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Macro Volatility Creates Entry Point For Nike, Susquehanna Upgrades To 'Positive'
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  • Nike Inc (NYSE: NKE) shares are down more than 8 percent since July 27, despite having peaked at $117.62 on August 5.
  • Susquehanna analyst Christopher Svezia upgraded the stock from Neutral to Positive, while raising the price target from $103 to $122.
  • The recent pullback in Nike’s shares make them attractive in view of of sustainable global growth and improving operating leverage.

Analyst Christopher Svezia mentioned that global investments are leveraging and should help Nike achieve top and bottom line outperformance in the next 12-18 months. “Global growth continues in key regions (North America and Western Europe) with a potential turn in Emerging Markets given an event year (Olympics).”

Svezia added that demand in China remains robust and the near-term concerns are already “getting priced in.”

At its analyst day in October, Nike is expected to outline a comprehensive framework toward HSD Currency-neutral sales growth and mid-teens EPS.

Susquehanna noted, “We never doubted the growth engine, but were concerned over investments, currency and high multiples.” Increased confidence in Nike’s investments and its ability to generate both growth and better flow have enhanced the likelihood of the company’s outperformance.

Svezia enumerated the other catalysts that can boost Nike’s stock as a likely positive Q1, an upbeat analyst meeting in October, continued expansion in gross margins, recapture of geographic margin in China and Emerging Markets and strong capital returns.

Latest Ratings for NKE

DateFirmActionFromTo
Dec 2017ArgusUpgradesHoldBuy
Nov 2017HSBCDowngradesBuyHold
Oct 2017Goldman SachsDowngradesBuyNeutral

View More Analyst Ratings for NKE
View the Latest Analyst Ratings

Posted-In: SusquehannaAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga

 

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