Market Overview

The Bull And Bear Cases For Nike

The Bull And Bear Cases For Nike

Deutsche Bank recently held a bull versus bear debate with an athletic sector expert. Here’s an overview of the bull and bear cases for Nike Inc (NYSE: NKE).

Bull Case

  • The North American business still has another leg up.
  • ASP growth remains strong.
  • The North American full-price channel is cleared, and the company is working on clearing the factory/value channel as well.
  • Shifted emphasis on DTC, apparel and foreign markets has created an unparalleled gross margin expansion opportunity.
  • Nike’s business is tied to a growing middle class in emerging markets, and global sports participation is on the rise.
  • The stock’s 10.8 percent 2016 pull-back is an opportunity to buy the dip.
  • Government policies in China support athletics.

Related Link: Nike Drops Golf Equipment: Here's How You Can Take Advantage

Bear Case

  • Competition from Under Armour Inc (NYSE: UA) and others in the North American market is heating up.
  • ASP growth has slowed in the past year.
  • Inventory positions in Greater Europe, Greater China and Japan worsened in Q4.
  • Q4 gross margins came up well short of consensus analyst expectations.
  • International markets are a long-term growth driver, but the company needs a short-term catalyst to maintain its momentum.
  • The stock’s pre-momentum valuation implies more than 20 percent downside ($43–48).
  • Economic growth in China is slowing.

Full ratings data available on Benzinga Pro.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Disclosure: The author holds no position in the stocks mentioned.

Latest Ratings for NKE

Dec 2019UpgradesNeutralBuy
Dec 2019MaintainsOverweight
Nov 2019Initiates Coverage OnOverweight

View More Analyst Ratings for NKE
View the Latest Analyst Ratings

Posted-In: Deutsche BankAnalyst Color Long Ideas Short Ideas Analyst Ratings Trading Ideas Best of Benzinga


Related Articles (NKE + UA)

View Comments and Join the Discussion!

Vans Launches Exclusive Partnership With Nordstroms

TreeHouse Foods' Integration Of Acquisitions Remains On Track