uploads///nke pm

Jefferies and Stifel Reduced Nike’s Target Price

By

Jul. 1 2016, Updated 11:06 a.m. ET

Price movement

Nike (NKE) has a market cap of $92.9 billion. Its stock rose by 3.8% to close at $55.13 per share on June 29, 2016. The stock’s weekly, monthly, and YTD (year-to-date) price movements were 1.0%, 0.13%, and -11.3%, respectively, on the same day. NKE is trading 2.0% above its 20-day moving average, 2.1% below its 50-day moving average, and 8.5% below its 200-day moving average.

Article continues below advertisement

Related ETF and peers

The iShares Russell Top 200 Growth ETF (IWY) invests 1.2% of its holdings in Nike. The ETF tracks an index of US large-cap growth stocks selected from 200 of the largest US companies by market cap. The YTD price movement of IWY was -0.37% on June 29.

The market caps of Nike’s competitors are as follows:

  • VF Corporation (VFC): $25.3 billion
  • Under Armour (UA): $16.4 billion
  • Skechers USA (SKX): $4.7 billion

Nike sees its target price drop

Jefferies has reduced Nike’s target price from $67 to $65 per share and maintained the stock’s “buy” rating.

Stifel has reduced Nike’s target price from $73 to $68 per share and maintained the stock’s “buy” rating.

Piper Jaffray has reduced Nike’s target price from $69 to $58 per share and maintained the stock’s “overweight” rating.

TheStreet Ratings rated Nike a “buy” with a score of “B.”

Article continues below advertisement

Nike in fiscal 4Q16

Nike reported fiscal 4Q16 revenues of $8.2 billion, a rise of 5.1% from $7.8 billion in fiscal 4Q15. Revenues of footwear and apparel brands rose 6.3% and 3.9%, respectively, and revenues from equipment fell 5.8% in fiscal 4Q16 compared to fiscal 4Q15. Revenues from Western Europe, Greater China, and Japan rose 18.5%, 18.1%, and 21.7%, respectively. Revenues from Central & Eastern Europe and Emerging Markets fell 4.2% and 6.6%, respectively, in fiscal 4Q16 compared to fiscal 4Q15.

Nike’s net income fell to $846.0 million in fiscal 4Q16 compared to $865.0 million in fiscal 4Q15. It reported EPS (earnings per share) of $0.49 for fiscal 4Q16 and fiscal 4Q15.

In fiscal 4Q16, the company repurchased a total of 9.0 million shares worth ~$540 million under the share repurchase program of $12 billion approved by the board of directors in November 2015.

Fiscal 2016 results

In fiscal 2016, Nike reported revenue of $32.4 billion, a rise of 5.9% year-over-year. The company’s gross profit margin rose by 0.43% in fiscal 2016. Its net income and EPS rose to $3.8 billion and $2.16, respectively, in fiscal 2016 compared to $3.3 billion and $1.85, respectively, in fiscal 2015.

Nike’s cash and cash equivalents fell 18.5%, and its inventories rose 11.6% in fiscal 2016. Its current ratio and debt-to-equity ratio rose to 2.8x and 0.75x, respectively, in fiscal 2016 from 2.5x and 0.70x, respectively, in fiscal 2015.

In fiscal 2016, the company repurchased a total of 55.4 million shares worth ~$3.2 billion at an average price of $58.44, under the old and new share repurchase programs of $8 billion and $12 billion, respectively.

As of May 31, 2016, Nike has scheduled delivery of $14.9 billion in orders from June to November 2016. This translates to a rise of 8% in orders compared to the prior year and a rise of 11% on a currency-neutral basis.

In the next part of this series, we’ll take a look at Ecolab.

Advertisement

More From Market Realist