Analysts are sticking by Nike (NKE) , even as the stock slides in Friday trading.
Shares of the sports shoe and apparel leader opened Friday's trading day down, slipping even more strongly shortly after the opening bell as conservative guidance and slower-than-expected North American sales stung market sentiment.
However, that is only offering more opportunity in the view of analysts along Wall Street who overwhelmingly advised investors to buy the stock on its pullback.
"Early in 2019 we identified NKE as a top pick for the year," Oppenheimer analyst Brian Nagel wrote in a note on Friday morning. "We very much stick by that call and recommend clients use any "sell on the news" weakness in shares as an incremental buying opportunity."
He explained that short-term noise on the timing of certain NBA-related releases is obscuring the long-term view of a company that dominates its domain and should continue to do so as global, digital efforts continue to look good.
"In our view, Nike represents an already dominant, legacy global brand that is now aggressively embracing the power of digital to enhance almost all facets of its business model," Nagel said. "We look on upbeat Street forecasts and guidance as at least do-able and supportive of a premium valuation. Our call on NKE is longer term in nature and not necessarily pegged to near-term data points."
Based on his bullish outlook, he set a 12 to 18-month price target at $100 per share, which would imply the first time Nike stock has ever touched triple digits.
Nagel was far from an outlier in his advice to clients.
"The [fourth fiscal quarter] guide will likely be beat and the preliminary 2020 guide came in generally as expected as well," Wedbush analyst Chris Svezia commented, quelling primary concerns on guidance. "2X and Consumer Direct Offense initiatives are generating positive results and accumulating NKE shares on weakness is recommended."
He added that the digital and global push add to bullish not only in demand, but also in margins by cutting out middle men like Foot Locker (FL) where possible.
"NKE is experiencing strong global growth, reflective of its winning key strategies, including the Triple Double and Consumer Direct Offense," Svezia noted. "These factors and more have contributed to the iconic brand's global sales momentum and opportunity for margin outperformance, particularly gross margin. Indeed, the underlying outlook for the company has again improved and there continues to be upside opportunity in FY19 on both sales and gross margin, key ingredients to generate multiple and share price expansion."
Svezia set his price target at $96 per share on the back of his bull case.
Counterintuitively, it may seem, over 50% of analysts polled by FactSet raised price targets based on the quarterly report and commentary from executives.
The change in estimates along Wall Street has actually raised the consensus price target from about $89 prior to the call, to just over $91 per share after.
Considering the price action is so juxtaposed to analyst actions on Friday, it could be a fine opportunity to jump into Nike before it starts running again.
