Credit Suisse Remains Positive on Nike Inc (NKE) Long-Term with Some Near-Term Concerns

Last Tuesday, on November 8th, Credit Suisse analyst Christian Buss visited the new Nike Inc (NYSE:NKE) flagship retail store in SoHo, New York, with management leading a tour and providing him a description of services before Friday’s big opening day. Following the corporate store visit, the analyst remains largely confident as ever on NKE’s business-minded approach, except with eyes simultaneously observing recent revenue deceleration. The analyst presents a long-term bullish forecast for the athletic retailer giant, but remains wary on the company’s near-term market share, believing real risk is palpable.

On the heels of the meeting, the analyst reiterates an Outperform rating on NKE with a price target of $60, which represents an 18% increase from where the shares last closed.

Buss assesses, “Our visit reinforces the view that Nike is pushing its business aggressively towards DTC and deploying resources that should allow the company to continue to shift the mix of its business from wholesale to owned-retail and eCommerce. Our long-term bullishness is predicated on the company successfully managing the margin-accretive transition to over 30% of sales coming from DTC […] That said, the store visit did little to allay fears that the company’s near-term market share is at risk. The reason? A lack of newness in the product offering, with a marked emphasis on heritage product (i.e., Space Jam reissues from 1996) and technologies on the footwear side that are starting to look long in the tooth.”

Overall, “With Nike having historically self-corrected on product misses quickly, we maintain our Outperform rating, but note that we will need to see a meaningful shift in the product assortment over the next 6-12 months to maintain our positive long-term stance,” Buss concludes.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, one-star analyst Christian Buss is ranked #2,992 out of 4,209 analysts. Buss has a 42% success rate and faces a loss of 1.0% in his yearly returns. However, when recommending NKE, Bus earns 7.4% in average profits on the stock.

TipRanks analytics demonstrate NKE as a Buy. Out of 27 analysts polled by TipRanks, 17 are bullish on Nike stock, 9 remain sidelined, and 1 is bearish on the stock. With a return potential of nearly 24%, the stock’s consensus target price stands at $62.71.screen-shot-11-14-16-at-02-18-pm

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