Shares of Nike gave back gains after a post-earnings rally, even as another analyst upgraded the Dow Jones stock.
KeyBanc upgraded Nike to overweight from sector weight with a 90 price target. Nike's latest quarterly report showed continued progress on its turnaround plan, KeyBanc analysts said in a research note, according to TheFly.com.
While the company is likely to face some difficulties from tariffs and the China market, analysts believe Nike's Sport Offense, innovation pipeline and marketplace resets position the company for a return to sustainable growth and margin recovery.
It was the latest in a series of analyst upgrades and target-price hikes that followed Nike's better-than-expected fiscal Q1 report late Tuesday.
TD Cowen, RBC Capital Markets and DZ Bank are others that upgraded Nike to buy ratings after the earnings report, according to FactSet and TheFly.com. Of 38 firms that follow Nike, more than half now have buy ratings, while 16 have hold ratings and two have sell recommendations, FactSet shows.
Nike Seeks Turnaround
The sports apparel company — one of the 30 components in the Dow Jones Industrial Average — is trying to come back from a four-year slump. The company faces growing competition, while tariffs (which rose during the quarter for some countries) continue to hurt its financial performance.
Nike said tariffs were one reason its quarterly gross margin fell by 320 basis points. Executives told analysts in the earnings call they expect an incremental tariff cost on an annualized basis of about $1.5 billion for the current fiscal year. It earlier estimated a $1 billion hit.
Nike stock surged 6.4% Wednesday in reaction to the earnings report, according to IBD MarketSurge. A 3.8% jump Thursday morning faded to flat trade. Shares climbed back above the 50-day moving average, but were back below the line in afternoon trading.
The company's Composite and EPS Ratings are both 26 out of 99.
