Nike (NYSE:NKE)
Nike (NYSE:NKE) stock shook at the start on Wednesday, falling by roughly 2% after rising by more than 4% after the release of results on Tuesday night. The findings were met with analysts’ mixed reactions, contributing to the erratic stock price movement.
Pessimistic forecasts came from analysts at Wells Fargo and Bank of America, who pointed out that falling stock levels are coming at the price of shrinking profit margins, which fell short of estimates in the third quarter.
Management’s goal is more inventory turnover than anticipated at year’s end, and the company hopes to finish the year with a solid stock of goods. We believe this was an important message, but the positive news was partly overshadowed by a reduced GM projection,” Bank of America’s Lorraine Hutchinson said.
She didn’t change her mind about the stock being Neutral, but she did raise her price objective from $128 to $135. Analysts at Wells Fargo have reduced their price objective from $146 to $142. The latter bank was nonetheless assigned an Outperform rating, although the analysts admitted that the price was high.
Despite the stock’s disappointing opening on Wednesday, Evercore ISI has given it a more upbeat Tactical Outperform rating.
The equities analysts Warren Cheng and Omar Saad wrote their clients, “With Nike shares looking like they might be flat or even down today despite a strong quarter with multiple good fresh initiatives,” they added NKE to their TAP list (a tactical outperform). With inventories expected to be depleted by the end of the fourth quarter, Nike may be well-positioned to deliver rapid revenue growth AND margin improvement in 2024, a scenario expected to entice many new investors over the following ninety to one hundred eighty days.
The two also said that the Greater China area may see an uptick in demand improved. Compared to other markets, China’s inventory levels are higher, which will help the market recover in 2023.
UBS’s Jay Sole, who covers the company, agreed that the results for the third quarter were encouraging. He reiterated his firm’s Buy recommendation for the Nike stock. The print was so convincing that he increased his price objective from $151 to $155.
Sole predicted that Nike would see above-average growth for several years by pointing to the company’s expenditures in product innovation, supply chain speed, and digitization. More than that, Nike has the brand power, strategy, capabilities, resources, and financial sheet to outperform rivals in a downturn.
Even now, “Buy” is the recommended investment strategy among market professionals. Shortly after the market opened on Wednesday, Nike stock fell 1.82%.
Featured Image: Pixabay @ Pexels
