There are bulls and there are bulls behind certain high-profile stocks on the exchange. As February began to melt into March, one analyst became suddenly, and extremely, positive about Nike's (NYSE: NKE) future, to the point where he flagged the stock as having 50% upside potential. That's an awfully high number for such an established business; let's determine if it's realistic.
Running ahead of the pack
On the last Monday of the month, Jefferies analyst Randal Konik upgraded his recommendation on Nike stock to buy from his previous hold. More dramatically, he made a serious lift to his price target, sending it on a rocket to $115 per share from the comparatively modest level of $75.
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According to reports, Konik's new view of the athletic shoe and apparel specialist is based to no small degree on its leadership. He wrote in his update that recently installed CEO Elliott Hill is effectively managing some of the company's most pressing problems, including challenges in its distribution system.
The analyst added that surveys indicate that Nike's brand remains extremely strong, which to him demonstrates that its problems were internal rather than the fault of any external factors. Konik imagines a "v-shaped recovery" in both profit margins and per-share earnings; for the latter in Nike's fiscal 2027 he's modeling a much higher result than the current consensus estimate ($3.50, against $2.95).
Deals and momentum
Lately, it feels that Nike has the momentum of a determined athlete working to get over a slump. Elliott does indeed seem to be having quite a positive effect on the company's operations, not least in its deal-making.
Earlier in February it signed a cooperation deal with Skims, an athleisure wear brand co-founded by popular reality TV star Kim Kardashian. The teaming up of Nike and a major celebrity alone will generate interest in the upcoming NikeSKIMS line.
I wouldn't underestimate Nike at all. Like Konik, I think the company is full of potential and it's starting to realize it. I'd be very bullish on its prospects, too.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Jefferies Financial Group and Nike. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
