Nike Just Does It: Analyst Likes Favorable Risk Reward, Shift From Wholesale To DTC


Shoe, apparel and equipment company Nike Inc.'s NKE direct-to-consumer (DTC) strategy shift and growth in China has an analyst paying attention.

The Nike Analyst: Jefferies analyst Randal J. Konik upgraded shares of Nike to Buy and raised the price target from $140 to $192.

The Takeaways: Nike has a favorable industry backdrop, is successfully leading a digitally-enabled customer acquisition strategy and growing its higher-margin items, Konik said.

A favorable risk-reward on Nike is presenting the analyst with an opportunity to upgrade shares and increase the price target. 

“We have grown increasingly confident in the mid-term growth and profit trajectory of the biz,” Konik said.

Strength in the sportswear market shows no signs of slowing down according to the analyst.

“Increased interest in health and wellness, higher adoption of casualwear fashion and the return of sports/outdoor activities should continue to fuel growth in the sportswear market in the years ahead.”

Related Link: Why NFT Sneakers Could Be Coming From Nike

Nike launched a marketing strategy in 2017 targeting geographical locations, sales channels and timed launches that “has seen tremendous success to date,” the analyst said.

“This new digitally enabled consumer-led model is taking Nike brand awareness to new highs and resonating particularly strongly in younger generations that favor fashion, speed and innovation.”

China could be the fastest-growing region for Nike in the years ahead.

“China is also the highest margin region for Nike, which inherently should enhance the company’s profitability profile and help unlock valuation upside,” Konik said.


One of the biggest strengths for Nike, the analyst points out, is the company’s increased DTC mix. Nike got 84% of sales from wholesalers in 2011 compared to 62% in the fiscal year 2021 year to date.

“Higher DTC mix enhances top line and margins whilst creating a better end-to-end experience that enlarges customer lifetime value,” Konik noted. 

The analyst thinks Nike could get to a 50% wholesale, 50% DTC mix in the future.

NKE Price Action: Shares of Nike are up 0.53%% to $137.12 on Tuesday afternoon.

(Photo: Nike)

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