Argus Affirms Buy On Nike, Raises Estimates, Price Target

• Shares of Nike Inc NKE have soared 31.41 percent year to date, rising close to their 52 week high on November 27 at $67.165.
• Argus’ John Staszak has maintained a Buy rating on the company, while raising the price target from $75 to $77.
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• The company has continued to gain market share, driven by worldwide store growth and its new footwear.

Analyst John Staszak expects Nike to post higher margins, driven by “recent price hikes, moderating input costs, and a less negative impact from foreign exchange.”

The company had announced a four year share buyback plan on November 19, worth $12 billion. Nike also intends to complete the remainder of its previous authorization, worth $1.5 billion, by the end of FY16, and to increase its dividend by 14 percent to $0.16 per share.

According to the Argus report, “Nike is working to boost results in China by dropping retail partners with disappointing sales and by diverting inventory to other markets.”

In the long term, Staszak expects the company to continue to hold its leadership position in the athletic apparel and footwear market, despite the fierce competition in this industry.

Nike has guided to annual earnings growth in the mid-teens. Staszak noted that “Nike has beat its earnings guidance in every quarter over the past three years, several times by double-digit percentages.”

The EPS estimates for FY16 and FY17 have been raised from $2.21 to $2.22 and from $2.49 to $2.50, respectively, to reflect “management’s accelerated growth targets, additional share repurchases, and history of positive earnings surprises.”