JPMorgan Boosts Nike (NKE) to Overweight; Sees Strength in Flyknit, DTC, China Rebound

February 11, 2013 3:31 PM EST Send to a Friend
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Price: $97.30 --0%

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Nike, Inc. (NYSE: NKE) is coming off nine-month high levels Monday following a upgrade by JPMorgan earlier. The firm took its rating from Neutral to Overweight, while boosting its price target 28 percent to $64.

JPMorgan recently met with management and is confident with Nike's ability to balance long-term investments -- such as e-Commerce and direct-to-customer sales - and current profitability efforts with the long-term model -- mid-teens+ EPS growth -- sooner rather than later.

Amid slowdown in China, JPMorgan still sees opportunity in the market along with new potential in Nikie's Flyknit line. The firm is modeling high-single-digit revs growth over the next three-year time frame. JPMorgan commented, "Taking a step back, the pipeline is robust with Free “on fire” ($1B+ w/ 50% of biz now outside of running) and Lunar ($0 to $1B line from 2008-2012) the roadmap for Flyknit (’12 launch w/ increased Spring distribution)."

Women will be key in apparel, having under five percent market share today with the NFL also representing a large opportunity.

E-Commerce still remains underpenetrated, accounting for just about two to three percent of sales today with outsized growth (39 percent-plus) over the next three to five years.

Shares are up 0.9 percent Monday afternoon.


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