JP Morgan analysts note that Nike, Inc. (NKE) has multiple positive factors that can boost shares in the near term. As such, the analysts raised the price target on the athletic footwear and apparel maker on Tuesday.
The analysts maintain an “Overweight” rating on NKE and now see shares reaching $70, up from the previous target of $64. This new target suggests a 10% upside to Tuesday’s closing price of $63.91
A JP Morgan analyst commented, “NKE’s runway remains long with upcoming catalysts including (1) Fall Analyst Day (likely October), (2) China stabilization (1H14 in our view), and (3) Flyknit scale (higher GPM). Looking ahead, we see 3-5 years of mid-teens EPS growth driven by a HSD+ top-line pipeline (product & expanding points of distribution), EBIT inflection w/ gross margins ~300bps below prior peak, and an $8B buyback equating to $4-$5 of EPS power by FY16E. A key tenet of our 2/11 upgrade to OW, NKE is more efficiently utilizingits balance sheet with proceeds from its $1B debt offering (largest in 10+ years) to be used for continued investment (i.e. HQ, N.A. DC, China HQ) and increased focus on shareholder returns through dividend increases and share repurchases. While the inventory overhang in China will not turn overnight (GPM headwind of ~50bps in 3Q; recent Belle comments), we believe the multi-year story is firmly on track.”
Nike shares were up a fraction during pre-market trading on Wednesday. The stock is up +23.86% year-to-date.
The Bottom Line
Shares of Nike (NKE) have a dividend yield of 1.31% based on last night’s closing price of $63.91 and the company’s annualized dividend payout of 84 cents per share.
Nike, Inc. (NKE) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars.
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