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On Friday, Jefferies analysts upheld their Buy rating on Nike (NYSE:NKE) shares, maintaining a $115.00 price target. The firm’s analysts noted that Nike’s current market capitalization mirrors figures from the period of 2016-2018. This was a time when competitor Adidas (OTC:ADDYY) had made significant strides with the launch of its Ultraboost shoe line. During that period, Nike reported sales of approximately $32 billion, earnings per share (EPS) of roughly $2.35, an operating margin (OM) of 12%, and a share count of 1.7 billion. Currently trading at $65.80, near its 52-week low of $64.95, Nike has seen its revenue grow to $47.82 billion in the last twelve months, with a diluted EPS of $3.01. According to InvestingPro analysis, Nike appears to be trading below its Fair Value, with 12 more exclusive insights available to subscribers.
The analysis highlighted that Nike’s share count has now decreased by over 10%, while the operating margin has dipped below 8%. However, if Nike’s sales rebound to around $50 billion and continue to grow at a mid-single-digit percentage annually, the analysts believe that the company’s margins should recover. This recovery has the potential to double the company’s earnings. Despite recent challenges, including a 25.68% decline over the past six months, Nike maintains strong fundamentals with a healthy current ratio of 2.19 and has consistently raised its dividend for 23 consecutive years. For deeper insights into Nike’s financial health and growth potential, access the comprehensive Pro Research Report available on InvestingPro.
The analysts emphasized Nike’s enduring status as the leading brand in an expanding market sector. They pointed out that the valuation of Nike stock is currently at levels similar to those of a decade ago, suggesting a strong investment opportunity with the phrase, "So, Just Buy It."
Nike’s performance and future prospects are particularly noteworthy in light of the company’s historical financial achievements and its position in the global market. The Jefferies analysts’ reiteration of a Buy rating and a $115.00 price target reflects confidence in Nike’s ability to navigate the current market conditions and capitalize on its brand strength and growth potential.
In other recent news, Nike has seen a variety of developments that are capturing the attention of investors. The company’s third-quarter financial results exceeded expectations, with revenues reaching $11.269 billion, surpassing the projected $10.924 billion, and earnings per share coming in at $0.54, higher than the anticipated $0.22, according to Stifel analysts. However, Nike’s outlook for the second half of fiscal year 2025 remains unchanged, with expected revenue declines at a mid-teen percentage rate and deeper-than-forecasted gross margin decreases. Piper Sandler maintained an Overweight rating on Nike with a $90 price target, despite forecasting a significant decline in the company’s Classics sales, which are expected to fall by 40% year-over-year by fiscal year 2025.
DA Davidson reiterated a Buy rating with a $273 price target, highlighting Nike’s North American business performance, which saw only a 4% decline compared to the expected 11%. Truist Securities adjusted Nike’s price target to $82 from $90, maintaining a Buy rating and noting the company’s intensified efforts to revamp its operations. Meanwhile, UBS reduced its price target to $66 from $73, keeping a Neutral rating, and pointed out potential risks that could further impact Nike’s earnings outlook. Stifel maintained a Hold rating with a $75 price target, noting that while Nike’s strategic cleanup is progressing, robust growth is expected to take several quarters. These recent developments reflect a mixed outlook for Nike as it navigates through its current challenges and strategic initiatives.
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