Nike Stock Tests Record Levels After Ackman Announces Stake

Data suggests NKE shares could have more fuel left in the tank

Jan 26, 2018 at 10:30 AM
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Shares of Nike Inc (NYSE:NKE) earlier matched yesterday's all-time high of $68.64, and at last check, the Dow component was up 1% at $68.36. The move comes after infamous investor Bill Ackman said his hedge fund Pershing Square has taken a passive position in Nike stock that has already netted a 30% return. This is just more positive momentum for NKE, which sports a year-to-date advance of 9.2% and is on pace for a fourth straight monthly win.

This technical strength could lead bearish analysts -- of which there are many -- to upwardly revise their outlooks. As it stands now, the majority of analysts in coverage have "hold" or "sell" ratings on the stock. The shares also just tore through their average 12-month price target of $66.10, so all told, the blue chip could be looking at even more bullish attention in the near future.

Options traders, on the other hand, have been trying to profit from the stock's upward trajectory. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security has accumulated a 10-day call/put volume ratio of 2.34, ranking in the bullish 94th annual percentile. Said simply, there's been very strong demand for Nike call options.

Finally, part of the equity's recent ascent may be the result of short sellers covering their positions. In the last two reporting periods alone, the number of NKE shares held by short sellers has decreased by 26.6%. But with 28.74 million shares -- nearly four times the average daily trading volume -- still sold short, there's room for this short-squeeze momentum to continue.


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