UPDATE: HSBC Upgrades Nike (NKE) to Buy

HSBC analyst Erwan Rambourg upgraded Nike (NYSE: NKE) from Hold to Buy with a price target of $158.00 (from $125.00).

The analyst comments "In early 2019, we made the case in a report called “The digital revolution is coming”(8 January 2019), that after more than a decade of stable EBIT margin, the digital shift at Nike could change its business model. Now one could argue that evidence of this is not lacking but we are belatedly taking it into account. To a certain extent, like many things under COVID-19 conditions, this shift has accelerated since March 2020. Indeed, online exposure of the Nike group is already c30% of sales, a target that was originally set for May 2023. Separately, it seems that the US wholesale restructuring has also gathered pace as the dichotomy between the best performing partners and the nice-to-haves has also produced an important gap. For a very long time, we have believed that Nike’s business model was essentially to reinvest all excess profits to ensure the group would continue to take market share from peers. More recently however, given elements of scale and benefits of higher-margin channels (online, DTC, Asia), it has become clear that the debate around sales or EBIT is indeed no longer an either or – Nike can have both."

For an analyst ratings summary and ratings history on Nike click here. For more ratings news on Nike click here.

Shares of Nike closed at $135.65 yesterday.

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