After a not so stellar performance in the first half of 2017, shares of Nike Inc NKE ended the year on a positive note, which has some Wall Street analysts convinced further share gains can be seen in 2018.
The Analyst
Buckingham Research Group's Eric Tracy initiated coverage of Nike's stock with a Buy rating and $72 price target.
The Thesis
Nike's stock has gained more than 20 percent over the past three months and this move is justified based on the company's positive story, Tracy said in a note. The positive sentiment is based on the belief that the company could generate a mid-single digit revenue growth and a mid-teens earnings per share growth over the coming five years.
There are six reasons to believe Nike can hit the analyst's targets, including multiple levers the company can pull to generate growth in the global market, an innovative pipeline "refresh" that could gain traction in the back half of 2018 and then scale in fiscal 2019, expectations for a stabilization or reset in the North American market as Nike re-gains market share it may have lost, and Nike's "ManRev Project" could prove to be a long-term game changer.
Prcie Action
The analyst's $72 price target is based on a 26 times multiple on Nike's fiscal 2019 EPS, which is roughly in-line with the consumer growth peer group average of 27 times.
Shares of Nike gained about 1 percent Friday to trade at $64.09.
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