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Author: Alan LittleDate: 2020-09-24

Nike (NKE) shares rise 10% after “stunning 1Q21 snapback”

Sportswear giant Nike (NKE) crushed revenue and earnings expectations in fiscal Q1, paving the way for a 10% spike in shares during Wednesday’s trading as analysts hiked ratings and price targets.

At Tuesday’s close, Nike posted $10.6bn revenues for the latest three-month period, a figure that beat the Wall Street consensus of $9.14bn.

Adjusted earnings per share also climbed 10% year over year to $0.95 against the $0.47 forecast.

Digital sales were strong as overall sales through Nike’s website soared 82% on the back of double-digit growth across a number of regions, including Greater China, Europe and the Middle East.

Nike’s CEO John Donahoe hailed the latest results, stating that its innovative product launches, connection with consumers, and digital acceleration are all combining to help the company unlock its long-term potential.

A blockbuster fiscal Q1 marks an instant turnaround for Nike, which recorded a 38% drop-off in revenue and an overall net loss in the previous quarter as store closures hit its bottom line.

Analysts at Deutsche Bank were won over after adding $44 to a new $151 price target and pivoting from a hold to buy rating.

They noted: “As impressive 1Q results showed, NKE is a better, more profitable company today than it was a year ago and there is quite a short list of entities that have been able to achieve that.”

Morgan Stanley analysts, noting a “stunning 1Q21 snapback”, also set a higher $152 price target and stood pat on an overweight rating.

The future also looks bright for Nike as CFO Matthew Friend revealed in a conference call that revenue should grow around 8-12% during the full fiscal year.

Nike shares jumped after the earnings report was published and were trading 9.18% higher ($127.12) at 11:50am on the New York Stock Exchange.

Nike Stock

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