Jefferies maintains Nike stock Buy rating with $115 target

On Friday, Jefferies analyst Randal Konik reiterated a Buy rating on Nike (NYSE:NKE) stock, maintaining the price target at $115.00. Konik’s assessment followed the observation of slowing sales growth for the HOKA brand, a competitor in the athletic footwear market. The analyst pointed out that HOKA’s year-over-year sales growth decreased to +10% in the fourth fiscal quarter, compared to +24% and +35% in the third and second fiscal quarters, respectively. This comes as InvestingPro data shows other competitors like On Holding (ONON) maintaining robust revenue growth of 34.92% over the last twelve months.

Konik suggests that Nike’s intensified focus on innovation and the reintroduction of wholesale channels, such as its partnership with Amazon (NASDAQ:AMZN), positions it to gain market share. Despite Nike’s stock trading near a 15-year low on an enterprise value-to-sales basis, the analyst recommends continuing to purchase shares, citing the brand’s global recognition and leadership in athletic footwear. Meanwhile, InvestingPro analysis indicates that competitor On Holding is trading at elevated multiples, with a P/E ratio of 76.7 and high EBITDA valuation multiples, suggesting a potentially overvalued status.

The analyst notes that competition in the sneaker market is limited and often underappreciated, with Nike’s total addressable market (TAM) being substantial due to its diverse price points that appeal to a wide consumer base. In contrast, competitors like ONON and LULU have higher price points that limit their market reach. While ONON maintains impressive gross profit margins of 60.62% according to InvestingPro data, Nike’s established brand identity as a lifestyle brand differentiates it from competitors, with ONON having a limited apparel presence and LULU a negligible footprint in footwear. For deeper insights into ONON’s financial health and 18 additional ProTips, visit InvestingPro.

Nike’s strategic distribution decisions, including a recent partnership with URBN, and the anticipated Nike-SKIMS apparel launch are expected to drive consumer interest and apparel momentum. These initiatives are part of CEO Elliott Hill’s plans to recalibrate Nike’s wholesale channels and reinforce the company’s market presence. For comprehensive analysis of Nike and its competitors, including detailed valuation metrics and expert insights, access the Pro Research Reports available on InvestingPro, covering over 1,400 top US stocks.

In other recent news, On Holding AG reported a strong first-quarter performance with a 43% growth in constant currency revenue, significantly driven by the Asia-Pacific region’s 129% increase. This impressive growth led Stifel analysts to raise their price target for On Holding AG to $66, maintaining a Buy rating. Similarly, TD Cowen increased their price target to $63, citing On’s robust top-line trends and potential benefits from trade deals. Truist Securities also raised their price target to $69, highlighting the brand’s continued momentum and resilience in the market.

These developments follow the appointment of Helena Helmersson, former CEO of H&M Group, to On’s Board of Directors, aiming to strengthen the company’s strategic direction. Meanwhile, the merger between Dick’s Sporting Goods (NYSE:DKS) and Foot Locker (NYSE:FL) is expected to benefit brands like On by expanding market reach and improving brand partnerships. Analysts from Bernstein view the merger as a net positive for On, providing opportunities for growth in the U.S. market. These updates reflect the dynamic landscape in which On Holding AG is operating, characterized by strategic leadership changes and favorable market conditions.

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