Nike Stock Price Forecast September 2021 – Time to Buy NKE Stock?

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Nike (NKE) stock has gained 11.6% in 2021 and is underperforming the S&P 500. The stock is currently down 10.3% from the 52-week highs and is in a correction zone.

Nike stock was strong in 2020 and the uptrend continued in 2021. However, the stock has looked weak after hitting its all-time high in August. What’s the forecast for NKE stock and is it a good buy in September?

Nike stock recent developments

Nike stock analysis

Nike would release its fiscal first-quarter 2022 earnings on Thursday after the close of US markets. Analysts expect the company to report revenues of $12.5 billion in the quarter ended August, a year-over-year rise of 17.8%. In the previous quarter, it reported revenues of $12.34 billion which almost doubled year on year and surpassed analysts’ estimates of $11.01 billion.

Notably, Foot Locker and Lululemon Athletica also reported better than expected earnings despite the headwinds. Lululemon Athletica reported a 390 basis point expansion in its gross margins for the fiscal second quarter ended in July. Its gross profits increased 72% to $842.7 million during the period and the margin was a healthy 58.1%. The stock had surged after the earnings release.

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NKE earnings estimates

Analysts expect Nike’s adjusted EPS to rise 18% to $1.12 in the quarter. During the fiscal fourth quarter 2021 earnings call, Nike said that it expects to post revenues above $50 billion in the fiscal year 2022 which was ahead of the $48.5 billion that analysts were expecting. After the company’s earnings beat and rosy guidance, several analysts upgraded Nike stock. Meanwhile, the company might update its guidance in the upcoming earnings release considering the supply bottlenecks, especially the closure of its factories in Vietnam.

Almost all the companies in the retail industry have talked about supply-side bottlenecks in the recent earnings release. Global supply chains have been adversely impacted by the COVID-19 outbreaks in parts of Asia. Also, in the US, the labor shortage has been impacting several industries.

Analysts on Nike stock

Last week, BTIG downgraded Nike stock from a buy to neutral citing adverse impact from the supply chain situation. “We believe the risk of significant cancellations beginning this holiday and running through at least next spring has risen materially for NKE as it is now facing at least two months of virtually no unit production at its Vietnamese factories which accounted for 51% of footwear and 30% of apparel units,” said BTIG analyst Camilo Lyon.

The COVID-19 vaccination rates in Vietnam are quite low. The country has had to impose lockdowns in a bid to contain the spread of the virus. The lockdowns have taken a toll on the manufacturing industry also whose ripples are felt by companies like Nike that source from the country.

UBS is bullish on NKE stock

Meanwhile, while a section of the market has turned bearish on NKE stock amid the supply-side bottlenecks, UBS has a different view and believes that the markets are overreacting. “The pivotal Nike question is how much will Vietnam factory shutdowns negatively impact its FY22 guidance? The issue has caused us to revise our FY22 EPS estimate 3% lower, to $4.26 from $4.40. However, our conversations with investors suggest the market thinks the impact will be worse,” said UBS in its note while reiterating its buy rating.

Nike earnings

Nike stock forecast

Looking at the consolidated ratings, Wall Street analysts have a bullish forecast for Nike stock. Of the 29 analysts covering NKE, 24 rate it as a buy or equivalent while four rate it as a hold. One analyst has a sell rating on the stock. NKE stock has a median target price of $185 which is an 18.3% upside over current prices. Its street high target price is $221 which is a premium of 41.3% over current prices. The stock trades near its street low target price of $157.

NKE stock long term forecast

The long-term forecast for Nike stock looks positive. The company has been pivoting towards e-commerce operations which would help it improve the margins in the medium to long term. It does face challenges especially in China where it battled boycott calls earlier this year. That said, Nike looks among the best stocks for the long term. Along with the recovery in North America, NKE would also benefit from growing sales in emerging markets like China.

Analysts expect NKE to report a sales growth of 12.2% in the fiscal year 2022 and 10.2% in the fiscal year 2023. The sales growth outlook looks impressive. Notably, the bottomline growth is expected to surpass the sales growth over the period. Analysts expect its adjusted EBITDA to rise 16.7% and 15.6% respectively in the fiscal years 2022 and 2023.

NKE stock valuation and technical analysis

Looking at the valuations, Nike stock trades at an NTM (next-12 months) PE multiple of 37.1x. The multiples are lower than the 39.8x that they have averaged over the last year. However, the multiples are higher than the long-term averages. For instance, NKE’s forward PE has averaged 34.6x, 30.6x, and 26.7x over the last three years, five years, and ten years respectively.

The valuation multiple expansion should be seen in the light of the broader market valuations which are running ahead of the historical averages. Also, Nike’s pivot towards e-commerce has helped in rerating of the stock. The company’s sales growth has also picked up which has helped buoy sentiments.

Should you buy Nike stock

Nike stock currently trades below the 50-day SMA (simple moving average) and has faced resistance at the level. It however trades above the 100-day and 200-day SMA. The MACD (moving average convergence divergence) also gives a sell signal. However, the stock is now getting the oversold zone with a 14-day RSI of 30.5. RSI values below 30 signal oversold positions.

That said, Nike looks like a good stock to buy after the recent correction. The upcoming earnings release should help buoy sentiments and take the stock higher from these levels.

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About Mohit PRO INVESTOR

Mohit Oberoi is a freelance finance writer based in India. He has completed his MBA in finance as a major. He has over 15 years of experience in financial markets. He has been writing extensively on global markets for the last eight years and has written over 7,500 articles. He covers metals, electric vehicles, asset managers, tech stocks, and other macroeconomic news. He also loves writing on personal finance and topics related to valuation.