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Nike Continues Drawing Bullish Analyst Predictions

By Rhian Hunt - Dec 21, 2020 at 2:33PM

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The latest rating sees a 33% upside and says Nike will continue outpacing its competition.

Athletic shoe and sportswear leader Nike ( NKE 0.14% ) continues to draw positive attention from Wall Street analysts after turning in robust second-quarter fiscal 2021 sales last Friday. Today, wealth management and analysis firm UBS joined the bull camp with a $183 price target, which, at the time it issued its research note, represented an approximate 33% upside for Nike.

In its research note, UBS describes Nike as effectively being in a class of its own. "Importantly, Nike's rivals have very little chance of catching up," the note states, citing the company's supply chain, advertising, and rollout of new products as putting it decisively ahead of its competitors. The firm also asserts the "main question is if the stock can continue outperforming given its +36% YTD move" before reaching the conclusion, "we have high conviction the answer is yes."

A pair of legs running in athletic shoes against a bright sunrise.

Image source: Getty Images.

Other analysts agree, with Matthew Boss of J.P. Morgan saying his firm sees "Nike's brand momentum across geographies as sustainable" and anticipates "multi-year, high-single-digit top-line growth" as the result, Footwear News reports.

Digital growth is the main driver of Nike's current success and rockstar status among analysts. During Q2, e-commerce sales ballooned 84% year over year. Speaking on the company's recent earnings conference call, CEO John Donahoe described the results as "evidence of the progress we've made toward our end-to-end digital transformation," identifying this as the primary factor "to better manage volatility and deliver strong growth."

While some less prominent analysts sound a cautionary note regarding Nike taking on large amounts of debt to drive earnings per share higher with share repurchases, and say its P/E ratio may indicate it's overvalued, most data appears to buttress UBS' optimistic predictions.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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