Nike: Despite sales weakness, potential for stock growth up to 42%

Last Updated: 16. Januar 2024By

Are you more into Adidas, Nike or Puma? One of the most well-known sports equipment manufacturers in the world is the US-based company Nike, specializing in the design, production and marketing of athletic shoes, sportswear and equipment. If you have shoes from Jordan, Converse Chuck Taylor, All Star, One Star, Star Chevron and Jack Purcell in your shoe cabinet, you also own Nike shoes.

Revenue falls behind expectations Although revenue increased by 1% to 13.39 billion US dollars, it fell short of analysts‘ expectations of 13.43 billion US dollars. Profit rose to $1.03 per share from $0.85 in the same period last year, meeting analysts‘ expectations.

Revenue and profit rise in half-year report In the first six months, revenue was $26.33 billion compared to $26 billion a year ago. Net profit was $3.03 billion compared to $2.8 billion in the previous year. Earnings per share from continuing operations were $1.99 compared to $1.79 in the previous year. The half-year results are not groundbreaking, but also not a disaster.

Nike must save Nike announced cost savings of $2 billion, which will result in a pre-tax charge of $400 to $450 million. These costs, mainly for severance payments to laid-off employees, are expected to be booked primarily in the current quarter. As important as cost savings are, one can’t help but wonder how the company plans to maintain a consistent level of quality with fewer employees.

Despite weak revenue, potential for a 42% increase in stock price Conclusion: As you can see from the chart, the weakened demand is clearly reflected in the stock price. However, analysts are still mostly optimistic. 24 out of 35 analysts recommend buying, 12 recommend holding, and only 2 recommend selling. The average analyst price target is $124, with the highest analyst price target at $150, which would offer a maximum potential of 42%. With a P/E ratio of over 28, the sports stock is still highly valued despite the correction.