Nike Inc. is facing supply chain disruption, cotton inflation and other challenges, but Goldman Sachs analysts say now is the time to buy the stock.
Goldman introduced Nike,
Buy with a 12-month price target of $ 172 in a note released on Tuesday.
“Currently, Nike is facing more macro headwinds than ever before,” wrote analysts led by Kate McShane. But they believe that Nike can navigate the headwind and emerge in a relatively strong position.
Some past examples of low quality Nike S&P 500 index SPX,
Include a time of 2015 and 2016 when Adidas AG’s ADS sales,
Stan Smith’s shoes grow and Nike struggles to compete and the sports authorities go bankrupt, leaving a ton of merchandise on the market. The stock returned to the record in January 2018.
Views: Levi Strauss long ago diversified his supply chain and said it was now cutting rewards.
Now, Nike is facing problems with the Covid-1 to, due to the shutdown of production in Vietnam and the rising price of cotton, which Goldman analysts say rose 45% year-on-year in August. Clothing is a big business for Nike and high cotton prices could hit gross margins.
Moreover, Goldman says there has been a backlash against American brands in China, with analysts saying downloads of the SNKRS app have declined, although sentiment may gradually improve.
Nike stock lost nearly 11.2% from its August 5 record near $ 173.85, but has risen 10.5% so far this year. Meanwhile, the S&P 500 Index SPX,
Has gained 16.2% year to date and the Dow Jones Industrial Average DJIA,
“[W]E thinks the stock side may still be on the upswing as Nike is likely to benefit from more customers focusing on well-being, potentially growing fashion trends after the epidemic, the company must continue its individual retail strategy to drive strong sales and margins, global membership demand and Its rich customer data and apps suite to use, and supply / demand is extremely tight; Publicity is limited, ”Goldman wrote.
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Analysts have tracked the million,000 million members of the SNKRS app, millions of fans of the company through social media, and the duration of their stay in a Nike shoe style, as the product is gone because of technology.
The note said, “The Dunkins was originally released in 1985, which turned them into a bit of a shoe style.”
“Nevertheless, we’ve seen Danux’s popularity skyrocket in recent years, suggesting a kind of timeless, nostalgic interest in some Nike platforms, engaging sneaker fans decades after the shoes arrived.”
Goldman also expects the Jordan brand, women’s business and its direct-to-consumer initiatives.
“By consistently bringing new and creative sneaker technology to market, Nike has created a variety of products that set them apart from their competitive brands, which we believe helps maintain customer loyalty and support price strength,” analysts said.
According to Factset, Nike will report financial second-quarter earnings on December 23rd.