Why Nike Stock Just Popped
JPMorgan analyst Matthew Boss just upgraded Nike stock to buy.
Nike's capable of growing earnings 20% a year over the next five years, says this banker.
That's nearly twice the rate of growth most analysts forecast for Nike.
10 stocks we like better than Nike ›
Nike (NYSE: NKE) ran up 3% through 10:05 a.m. ET Monday morning after JPMorgan analyst Matthew Boss upgraded the stock to overweight and raised his price target on the shoes and sportswear star to $93 a share.
Why JPMorgan likes Nike
Citing its own "fieldwork" on the stock, as well as conversations with management and SEC filings, Boss is raising his earnings forecasts for Nike in 2026 and 2027. He's predicting the company will grow earnings in the "high-teens to 20%" over the next five years, reports StreetInsider.com.
Management, says the analyst, is seeing "accelerating momentum within global wholesale orderbooks" and is aligning its inventory levels to support sales-growth trends. This should be completed by halfway through 2026. Boss also cited multiple trends that should result in stronger average selling prices in the running, global footwear, basketball, and training markets, leading to potentially a doubling of operating profit margins (to 10%) by 2028.
Longer term, Boss sees a path to Nike regaining pre-pandemic profit margins of 12% and even 13%.
Is Nike stock a buy?
Nike's not a bad business. To the contrary, it's a steady performer, and most analysts predict Nike is capable of growing earnings at least 11% annually over the next five years. The problem is that, at its current valuation of 35 times earnings, 11% growth might not be enough to justify such a high valuation.
JPMorgan's analyst holds out the hope, though, that Nike might grow nearly twice as fast as that -- 20%. Problem is, even 20% growth on a 35x-earnings stock works out to a price-to-earnings ratio of 1.75. That's still too high a price to pay for Nike.
Even if this analyst is right about Nike's growth prospects, I think the stock is still a sell.
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