"[Nike] shares should rise another 50% from here," said Jefferies analyst Randal Konik in a research note to clients. Konik rates Nike as his top pick with a $200 price target.
Added Konik, "Nike is one of the best brands on the planet, the global consumer is very strong, the company is furthering its connection with its consumer through tech, and the company's distribution model is moving away from wholesale. All this means NKE should see strong absolute and relative revenue growth, rising margins and accelerating EBITDA$ [earnings before interest, taxes, depreciation and amortization] and free cash flow."
Hard to argue with that stance.
The footwear giant reported record sales in North America for its fourth fiscal quarter. Sales surged 141% from last year, and 29% compared to the fourth quarter of 2019 (aka pre-pandemic). Digital sales soared 147% from the fourth quarter of 2019. Even China sales — where Nike has been swept up into consumer protests over its stance on Xinjiang — increased in all product categories in the quarter (led by a 34% increase in equipment sales). Jordan brand sales rose an impressive 31% to $5 billion in Nike's just completed fiscal year.
Nike's stock jumped 13% to $149.50 in pre-market trading on Friday. Investors also rejoiced over Nike's very upbeat full-year outlook. The company sees sales surpassing $50 billion for the first time and gross profit margins gaining in the range of 125 basis points to 150 basis points.
Given Nike's scale, analysts believe Nike's outlook is shocking and achievable.
Nike's size and budget prove a key, long-term competitive advantage. The brand has no parallel in history when it comes to North America size/scope. With a leading ad budget fueling industry-leading dollar growth, we expect ongoing gains," said BMO Capital Markets retail analyst Simeon Siegel.
Siegel reiterated an Outperform rating on Nike and issued a $174 price target.
Yahoo Finance's Reggie Wade contributed to this story.
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