Why This Nike Analyst Says Retailer Can 'Remain One Step Ahead'

Nike Inc NKE is the leader in sportswear and its digital business is likely to drive future growth, according to RBC Capital Markets.

The Nike Analyst: Piral Dadhania initiated coverage of Nike with an Outperform rating and a price target of $125.

The Nike Thesis: China’s economic recovery is likely to be “the catalyst to improve sentiment,” Dadhania said in the initiation note.

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“Nike marketing spend ($4.2bn) is unrivaled, despite lower relative spend, contributing to its attractive margin profile,” the analyst wrote.

“We believe Nike is relatively more defensive as a consumer stock given its product range desirability in Footwear, younger consumers attribute high priority to the category, and Nike has consistently gained share (+550bps since 2012),” he added.

“Nike has proven its ability to remain one step ahead, with Digital business transformation, China app relaunch, ERP upgrade and RTFKT acquisition recent proof points,” Dadhania further mentioned.

NKE Price Action: Shares of Nike had declined by 1.54% to $98.25 at the time of publication Thursday.

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