TLDR
- Wells Fargo upgraded Nike (NKE) from Equal Weight to Overweight, raising the price target from $60 to $75 based on improved sales and profit margin clarity.
- Nike’s revenue growth is projected to reach 3% to 4% by fiscal 2026, with gross margins expected to increase by 200 basis points.
- Director Jorgen Vig Knudstorp purchased 16,150 shares worth approximately $1.00 million, representing a 308.32% increase in his position.
- Nike beat earnings expectations last quarter with $0.49 EPS versus $0.27 expected and $11.72 billion revenue versus $10.96 billion expected.
- Analysts maintain a “Moderate Buy” consensus rating with an average price target of $82.21, with three Strong Buy ratings, 25 Buy ratings, and eight Hold ratings.
Nike received a vote of confidence from Wells Fargo this week. Analyst Ike Boruchow upgraded the stock from Equal Weight to Overweight.
The new price target jumped from $60 to $75. This represents a 25% increase in the firm’s valuation outlook.
Boruchow pointed to improved clarity in Nike’s sales and profit margins. He expects the three-year downward trend in estimates to reverse within the next 6 to 9 months.
The analyst highlighted positive developments in Nike’s innovation strategies. Current business challenges are expected to diminish over time.
Nike’s financial projections show promise for the coming years. Revenue growth is expected to reach 3% to 4% by fiscal 2026.
Gross margins are projected to increase by 200 basis points. This would be a welcome improvement for investors watching profit trends.
The stock currently trades at $63.10 with a market cap of $93.27 billion. Shares have ranged from a low of $52.28 to a high of $82.44 over the past year.
Recent Earnings Beat Expectations
Nike’s last earnings report exceeded Wall Street predictions. The company posted $0.49 earnings per share versus the $0.27 consensus estimate.
Revenue came in at $11.72 billion, beating expectations of $10.96 billion. This represented a 1.0% increase year-over-year.
The company maintains a strong balance sheet with a current ratio of 2.19. The debt-to-equity ratio stands at a manageable 0.59.
Return on equity reached 21.16% in the most recent quarter. Net margin held steady at 6.23%.
Insider Activity Sends Mixed Signals
Director Jorgen Vig Knudstorp made a purchase on November 7th. He bought 16,150 shares at an average price of $62.09 per share.
The total transaction value reached approximately $1.00 million. This increased his position by 308.32%.
Following the purchase, Knudstorp directly owns 21,388 shares. The transaction was disclosed in an SEC filing.
Chairman Mark G. Parker sold 86,078 shares in August. The shares were sold at an average price of $75.93.
This sale totaled $6,535,902.54. Parker still owns 744,988 shares valued at approximately $56.57 million.
Institutional investors own 64.25% of the company’s stock. Insider ownership stands at 0.80%.
Tobam raised its holdings by 27.3% in the second quarter. The fund purchased an additional 7,989 shares.
Tobam now owns 37,271 shares valued at approximately $2.65 million. Several other hedge funds have also adjusted their positions recently.
Analysts maintain a “Moderate Buy” consensus rating on the stock. The average price target across Wall Street sits at $82.21.
Three research analysts have issued Strong Buy ratings. Twenty-five have given Buy ratings while eight maintain Hold ratings.
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