Nike Stock Price Up 5% Today – Time to Buy NKE Stock?

Nike stock (NKE) is up over 5% in US premarket price action today and is looking to recoup some of its 2022 losses. The stock is underperforming the S&P 500 this year and hit its 52-week low earlier in March.

What’s the forecast for NKE stock and should you buy it in March 2022?

Nike stock recent developments

Nike reported its fiscal third-quarter 2022 earnings yesterday after the markets closed. It generated revenues of $10.87 billion in the quarter, which were 5% higher than the corresponding quarter in the previous year. Sales increased 8% on a currency-neutral basis and were higher than the $10.59 billion that analysts were expecting.

It reported an EPS of 87 cents, which was ahead of the 71 cents that analysts were expecting. The company’s gross profit margin also improved by 100 basis points and reached 46.6%. Nike Direct sales increased 15% to $4.6 billion. The company has been prioritizing direct sales including through its e-commerce platform. These sales are higher margin as compared to wholesale sales.

68% of all retail investor accounts lose money when trading CFDs with this provider.

John Donahoe on the results

Commenting on the earnings, John Donahoe, Nike’s CEO said “NIKE’s strong results this quarter show that our Consumer Direct Acceleration strategy is working, as we invest to achieve our growth opportunities.” He added, “Fueled by deep consumer connections, compelling product innovation and an expanding digital advantage, we have the right playbook to navigate volatility and create value through our relentless drive to serve the future of sport.”

Nike is also battling with the global supply chain outages and its CFO Matt Friend admitted that the sales might have been even higher if it was adequately supplied. He said, “Marketplace demand continues to significantly exceed available inventory supply.” Friend however added, “Our third quarter results demonstrate NIKE’s ability to navigate through volatility, while continuing to serve consumers directly and digitally, at scale.”

Nike reported strong sales in North America

Nike’s sales in North America, which is its biggest and most profitable market increased 9%. Its sales in Europe, the Middle East, and Africa, which is its second-largest market increased 13% on a currency-neutral basis while sales in Grater China fell 8%. NKE’s store sales increased 14% in the quarter while the wholesale sales fell 1% over the period.

NKE stock has been weak in 2022 amid multiple concerns. It looked set to have its worst quarter since 2008 but the positive earnings surprise might help it recoup some of the losses for the year.

Wall Street was bullish on NKE stock ahead of earnings

Baird reiterated its outperform rating on NKE last week. It said, “While NKE was a lower-conviction Outperform-rated idea entering 2022, we believe sentiment increasingly embeds global macro concerns. We expect NKE to deliver in-line or better FQ3 results and to express a positive view of category demand.” Bernstein had termed Nike along with Peloton as attractive buys earlier this month.

Nike stock price forecast

Looking at the consolidated ratings, Wall Street analysts have a bullish forecast for Nike stock. Of the 34 analysts covering NKE, 24 rate it as a buy or equivalent while seven rate it as a hold. One analyst has a sell rating on the stock. NKE stock has a median target price of $165 which is a 26.8% upside over current prices. Its street high target price is $195 which is a premium of almost 50% over current prices. The stock trades slightly 4% above its street low target price of $125.

After the earnings release, Morgan Stanley reiterated NKE stock as overweight. It said, “NKE beat Street estimates & guidance despite Covid-related headwinds and ongoing supply chain disruption. Improving trends in China are encouraging, but underlying demand trends likely remain clouded until Summer, pushing out the re-rating catalyst.”

NKE stock long term forecast

Nike has been pivoting towards e-commerce operations which would help it improve the margins in the medium to long term. Along with the recovery in North America, NKE would also benefit from growing sales in emerging markets like China. However, like other US companies, it faces the risk of boycott calls in China.

Nike is also focusing on metaverse. It has launched 3D immersive world of NIKELAND on online gaming platform Roblox. It also acquired virtual sneaker company RTFKT in the quarter. The company’s focus on metaverse could be another long-term driver. Companies like Facebook see metaverse as a big opportunity and Nike is trying to get an early mover advantage in the industry.

Should you buy NKE stock?

Nike is a strong global brand and demand hasn’t been much of a worry for the company. The stock has been underperforming the markets and its NTM (next-12 months) PE multiple has now fallen to just around 30x which looks quite attractive.

Buy NKE Stock at eToro from just $50 Now!