Several analysts are bullish on Nike Inc. ahead of its fourth-quarter financial report set for release at Thursday’s market close.
The sportswear giant, which is forecasted to notch earnings of 9 cents per share and revenues of $7.53 billion, has seen its price target raised by multiple analysts despite a predicted hit from the coronavirus pandemic — largely attributed to its digital prowess, continued product innovation and hard-hitting marketing messages.
“Nike is the preferred athletic apparel brand across gender, all ages and income levels,” added Cowen analyst John Kernan, who raised his price target on the company from $85 to $110. “It continues to build a moat around its brand through category offense, innovation and cultivating digital connections with consumers.”
According to Susquehanna Financial Group LLLP analyst Sam Poser, the company is predicted to see a short-lived weakness in its wholesale business as retail partners like Dick’s Sporting Goods, Foot Locker and Shoe Carnival open back up their stores. And while its e-commerce sales helped offset brick-and-mortar closures, Nike’s digital-first push over the past several years has also proven to be “prudent” as the fears over the outbreak continue to keep consumers indoors and drive them online.
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“Nike is recovering faster than nearly any company in our coverage universe,” said Poser, who increased his price target on the brand from $100 to $130. “Major economic disruptions lead the strongest brands and companies to cement their dominant market position, and the COVID-19 crisis has been no exception. Nike is emerging from the crisis in a position of strength.”
A month ago, Nike announced expectations of a material impact on its fourth-quarter business in North America, Europe and Asia. However, the Beaverton, Ore.-based company had taken the proactive moves of temporarily shutting down its outposts early and engaging with customers through its digital channels.
What’s more, Nike employed a so-called “playbook” of its learnings from China — where the outbreak originated in December — to inform the rest of its global business: It connected with consumers through its apps and digital platforms, as well as offered free workouts on its Nike Training Club Premium subscription app. It has also been able to capitalize on the mid-April to mid-May airing of “The Last Dance,” a 10-episode docuseries centered around the career of brand ambassador Michael Jordan, with three Jordan sneaker releases.
“Nike continues to be one of the most innovative companies with strategy and product; the brand resonates with consumers,” said Jane Hali, founder and CEO of retail investment research firm Jane Hali & Associates LLC. (She gave the brand a neutral rating for the fourth quarter, with a positive trend in the long term.) There is “strength in the Nike product lines across men’s and women’s,” she added.
Over the past couple months, the athletic behemoth has also delivered inspirational and powerful social media and ad messages — from a campaign encouraging Americans to stay home to prevent the spread of the coronavirus to a video condemning racial injustice amid national unrest spurred by the death of George Floyd. It has also launched philanthropic initiatives, such as prototyping protective face masks for medical workers, as well as pledged a $40 million commitment over the next four years to “support the Black community in the U.S. on behalf of the Nike, Jordan and Converse brands.”
In the year-to-date, Nike’s stock has dropped only 2% to $100.