Nike's Successful Air Max DN Launch Gets Off On The Right Foot, Says Analyst

Wedbush analyst Tom Nikic reiterates an Outperform rating on the shares of Nike Inc NKE with a price target of $115.

While NKE shares have languished recently due to investor frustration over lack of exciting new products, the analyst notes the company got much-needed good news on their annual “Air Max Day” celebration.

The analyst points to the new Air Max DN model that debuted in multiple colorways, and completely sold out on Nike.com.

This product, according to the analyst, is important because the company has been off its game from a product development perspective in recent years, so it desperately needs a hot new product to drive brand heat.

Also, in an increasingly competitive sneaker environment where rivals are innovating with foam-based cushioning, Nike’s specialization with air-based cushioning systems is a key point of differentiation versus peers, notes the analyst.

Thus, the analyst sees the successful initial launch as a positive data point for the brand.

That said, for a company of Nike’s size, one sneaker won’t move the needle all that much, so they will need to continue bringing innovative new products to the market, cautions the analyst.

The management’s plan for an Investor Day in the Fall could signal optimism about innovation, said the analyst.

The Investor Day in 2017 was a major positive catalyst for the shares, notes the analyst and adds that the setup into the 2017 event was similar to the current situation.

Overall, a steady flow of innovation will be important because Nike is simultaneously facing a headwind from reduced sell-in of older styles, specifies the analyst.

Price Action: NKE shares are trading higher by 0.80% at $93.32 on the last check Wednesday.

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