Shares of Nike rose 13.01% in after-hours on Tuesday as online demand drove better-than-expected 1Q results. The athletic apparel company reported 1Q earnings of $0.95 per share, which blew past Street estimates of $0.47. Revenues of about $10.6 billion surpassed analysts’ expectations of $9.1 billion in the first quarter ending Aug. 31.
Nike’s (NKE) earnings grew about 10.5% year-over-year, while revenues were down about 1% year-over-year due to the weakness in the wholesale business and NIKE-owned stores as well as lower traffic amid COVID-19. Revenues were flat on a currency-neutral basis. However, the company’s digital sales jumped 82% year-over-year or 83% on a currency-neutral basis, with double-digit growth across North America, Greater China, and APLA (Asia Pacific & Latin America) and triple-digit growth in EMEA (Europe, the Middle East and Africa).
Nike’s CFO Matt Friend said “NIKE is recovering faster based on accelerating brand momentum and digital growth, as well as our relentless focus on normalizing marketplace supply and demand.” He added “We continue to drive investment in capabilities that will fuel our consumer-led digital transformation, catalyzing long-term growth and profitability for NIKE.” (See NKE stock analysis on TipRanks).
Following 1Q results, Robert W. Baird analyst Jonathan Komp raised the stock’s price target to $115 (1.6% downside potential) from $95. However, he maintained a Hold rating on the stock as he sees limited stock upside. Komp noted that shares have outperformed since August and many of the positive fundamentals, supporting a healthy earnings recovery, are already priced in the shares.
Meanwhile, the Street has a bullish outlook on NKE. The Strong Buy analyst consensus is based on 23 Buys, 3 Holds, and 1 Sell. The $125.75 average price target implies upside potential of 7.6% to current levels. Shares have increased 15.4% year-to-date.
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