TLDR
- Jim Cramer reversed his previous stance on Nike, now saying “it’s time to buy” the stock
- Swedbank AB increased Nike holdings by 2.8% to $60.5 million worth of shares in Q1
- Analyst price targets vary widely, from $71 to $80, with consensus rating of “Moderate Buy”
- Nike reported Q1 earnings of $0.14 per share, beating estimates by $0.02
- Company announced quarterly dividend of $0.40 per share with 2.2% yield
CNBC’s Jim Cramer made a surprising reversal on Nike stock this week. The TV host, who has been cautious about the athletic wear company for years, now says it’s time to buy.
“I have not really cared for the stock of Nike for a very long time. That’s over,” Cramer said during his show. He believes the company has hit bottom and is ready for a turnaround.
Nike shares are down 0.9% year-to-date. The stock opened at $73.12 on Friday, trading within a 52-week range of $52.28 to $90.62.
Cramer pointed to inventory levels as a key factor in his changed outlook. He thinks Nike’s inventories are now low enough to signal a recovery ahead.
The host also praised Elliott Hill, who returned from retirement to lead the company. “Elliott Hill understands the tradition,” Cramer explained.
Institutional investors are showing renewed interest in Nike. Swedbank AB lifted its holdings by 2.8% during the first quarter.
The Swedish bank now owns 953,011 shares worth $60.5 million. This represents about 0.06% of Nike’s total shares outstanding.
Analyst Views Split on Nike’s Future
Wall Street analysts remain divided on Nike’s prospects. Evercore ISI cut their price target from $97 to $75 but kept an “outperform” rating.
Deutsche Bank lowered their target from $77 to $71. They maintained a “buy” rating on the stock.
Piper Sandler took a more positive view. They raised their price target from $70 to $80 with an “overweight” rating.
Morgan Stanley increased their target from $61 to $64. They assigned an “equal weight” rating to the shares.
The consensus rating sits at “Moderate Buy” with an average price target of $78.67. Three analysts rate it a strong buy, nineteen give it a buy rating, and eleven assign a hold.
Recent Financial Performance Shows Mixed Results
Nike reported first quarter earnings on June 26th. The company earned $0.14 per share, beating analyst estimates of $0.12.
Revenue came in at $11.10 billion for the quarter. This exceeded expectations of $10.69 billion but represented an 11.9% decline year-over-year.
The company maintains a market cap of $107.98 billion. It trades at a price-to-earnings ratio of 33.85 with a beta of 1.24.
Nike’s current ratio stands at 2.21 with a quick ratio of 1.50. The debt-to-equity ratio is 0.60, showing a reasonable balance sheet.
The company announced a quarterly dividend of $0.40 per share. This creates an annualized dividend of $1.60 and a yield of 2.2%.
Shareholders of record on September 2nd will receive the dividend on October 1st. The dividend payout ratio currently sits at 74.07%.
Chairman Mark Parker sold 110,000 shares in July at an average price of $72.29. The transaction totaled nearly $8 million and reduced his stake by 11.55%.
Nike’s 50-day moving average sits at $75.40 while the 200-day average is $67.81. Analysts expect the company to post $2.05 earnings per share for the current fiscal year.
