Morgan Stanley has updated its Nike share forecast, which unexpectedly published positive data for the pre-weekend quarter and boosted its outlook for the coming months. Income growth was posted by the company at $11.24 billion, or 9 percent from the previous year. Consensus figures amounted to just $10.6 billion. From $0.7 a year earlier (+11.4 percent), net income per share rose to $0.78. The demand was $0.63, which is smaller than it was a year earlier. Following this, Morgan Stanley Investment Bank moved its Nike share price target from $165 to $176 at the current market price of $142. At this estimate, the growth potential is almost 24 percent. From the previous $160 to $162, Credit Suisse also raised its target price for the stock.
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There are two explanations for the improvement in Nike’s results. The organization has succeeded in taking a large portion of its online revenue. The volume of sales across remote channels in the United States amounted to more than 200 percent year-on-year. On average, the online division of Nike grew worldwide by 84 percent. An unexpectedly dynamic demand from China is the second growth factor. Sales rose by 24 percent year-on-year in China. All this allowed Nike to create sales growth of about 13-14 percent for the entire current fiscal year.
It is worth remembering that at 86 points, Nike retains a reasonably high P/E value, which is much more than the average of the industry. This would normally mean that the stock is overheated. But now, against the backdrop of market consolidation, low rates and the general situation with the recession’s exit, the 2-3 month horizon of share growth to $150 apiece looks very real. Waiting for a decline to $135 per share is optimal for the purchase. In this scenario, in the medium term, investors would have the chance to gain around 11 percent on this stock.
