Nike Inc (NYSE:NKE), like many of its major distributors, has temporarily shuttered stores to help fight the spread of the coronavirus. Distributors that remain open continue to lose foot traffic as customers practice precautionary isolation.

The resulting sales cut doesn’t look great on the surface, but one analyst isn’t too concerned.

The Rating

BofA Securities analyst Robert Ohmes upgraded Nike to Buy but cut their price target from $110 to $85.

The Thesis

BofA halved its 2020 bottom-line estimates and adjusted its sales forecasts to reflect a 46% drop in the May quarter. The latter anticipates a $2 billion annual decline in North America and $1 billion fall in China, Europe and the Middle East.

Still, the analysts consider Nike relatively well positioned.

“We believe NKE remains the key brand that wholesale customers shift orders to in times of distress and should also benefit from its superior sourcing capabilities, with a vertically integrated supply chain and more consolidated supplier base,” Ohmes wrote in a note.

Nike shares have suffered a 30% pullback since the coronavirus outbreak began. BofA upgraded the stock as it trades at levels not seen since mid-2018.

“We believe current global athletic momentum favors NKE in both footwear (led by the Air Force 1 and Air Jordan 1 styles) and apparel (led by Sportswear) and believe an overall challenging environment could enhance NKE’s global market share momentum,” the analysts wrote.

NKE Price Action

At time of publication, Nike shares traded up 2.4% around $72.01.

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