Nike's Brand Legacy Continues To Outweigh China Headwinds, Goldman Sachs Says

Although Nike Inc NKE may face some headwinds in China due to the recent backlash against Western brands, the social media and app download trends remain robust, according to Goldman Sachs.

The Nike Analyst: Goldman's Kate McShane initiated coverage of Nike with a Buy rating and a price target of $172.

The Nike Thesis: The stock has become even more attractive, following the recent pullback due to sourcing concerns, which appear transitory and are now priced in, McShane said in the initiation note.

The stock could rise further “as Nike will likely benefit from more customers focusing on wellness, a likely increased casualization of fashion trends post the pandemic, continued execution of the company’s differentiated retail strategy which should drive stronger sales and margins, the leveraging of its rich customer data and suite of apps to drive membership and demand globally, and as supply/demand remains extremely tight; limiting promotions,” the analyst wrote.

Nike’s app downloads have historically outperformed archrival Adidas ADDYY, “having generated ~53% more downloads than adidas since the beginning of 2020 and 80% more since the beginning of 2021 (as of September ‘21), according to SensorTower,” McShane noted.

“Globally, Nike continues to dominate from a follower perspective on Instagram, while also generating strong U.S. Google search interest,” she added.

NKE Price Action: Shares of Nike had risen by 0.92% to $151.66 at the time of publication Tuesday.