Nike Earnings Expectation: Yuge

President & CEO John Donahoe emphasized the importance of Nike’s e-commerce operations during a Q4 earnings call back in June, saying it’s part of a “true step function change in our digital transformation.”

Nike reports earnings next Friday, and Keybanc Capital Markets maintains its bullish stance. They’re not alone, either, as a flock of bigwig firms on the Street have endorsed the athletic giant on the back of its resiliency throughout the pandy.

Analyst Matthew DeGulis slapped an Overweight rating and a $174 price target on Nike [$NKE] earlier today, noting that the retailer is making the right investments across its business, from e-commerce to international markets and product innovation.

DeGulis mentions that Nike, whose shares have risen more than 35% YTD, won’t face difficult comparisons next year—a concern for many other pandy winners. He writes that the virus complications has sparked the company’s strategy to pivot shoppers to its online, direct-to-consumer channel, as it has “added millions of new consumers to its databases over the past few months.” That ought to enable it to move from targeting simple customer acquisition toward driving purchases among existing customers—a much more logical strategy in terms of marketing spending.

In 2020, Nike’s digital sales reached $5.5 billion, up from $3.8 billion in 2019. Digital sales in 2018 were $2.8 billion.

Whats more, he believes that the massive gains that e-commerce has seen during the pandy aren’t going anywhere. That should help margins grow exponentially in years to come, especially as Nike’s digital infrastructure is unrivaled among its peers. DeGulis is one of 30 analysts tracked by FactSet who have a Buy rating or the equivalent on Nike. There are four analysts on the sidelines and a single bear on the Street.

All together, six analysts who cover Nike have bumped their price targets on the stock over the past month ahead of the retail behemoth’s earnings. The average analyst’s price target for Nike stock is sitting at $149.51. Nike was down 0.8% to $136.50 in recent trading. Consensus estimates call for Nike to earn 62 cents a share on revenue of $10.55 billion in the coming quarter.

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