Goldman Sachs initiated research coverage of Nike (NYSE:NKE) stock with a Buy rating with a 12-month price target of $139 per share, which suggests a 21% upside potential.
The rationale behind the Buy rating is grounded in the expectation that Nike is poised for an upturn in earnings growth. The company is anticipated to benefit from transitory cost recapture and an improving marketplace inventory environment.
“Additionally, we see room for stronger revenue growth ahead as the company cycles tough compares and reaccelerates its innovation and marketing engine into 2024,” analysts said in a note.
The analysts acknowledge short-term challenges such as competition affecting market share, pressures in the wholesale channel, and diminishing tailwinds from specific growth drivers like the Jordan Brand, China, and macroeconomic uncertainty.
However, these concerns are deemed well-understood and factored into the current valuation, which is still regarded as “attractive” despite a recent rally in Nike stock.
Nike was named a new Top Pick at Wells Fargo yesterday.
Shares are down 1.6% year-to-date.