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Nike Stock Could Hit Record Highs After Bull Notes

NKE is second to AAPL as best Dow stock so far this year

Aug 20, 2018 at 9:15 AM
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The shares of Nike Inc (NYSE:NKE) have surged 27.5% year-to-date -- second only to Apple (AAPL) in terms of best Dow stock so far in 2018. This upside is set to continue today, with NKE stock up 2.2% in electronic trading -- closing in on its Aug. 9 record high of $81.88 -- after receiving a fresh round of bullish brokerage attention this morning.

Most notably, Piper Jaffray upgraded NKE stock to "positive" from "neutral," and boosted its price target by $21 from $93 -- the highest on Wall Street, and a 16.6% premium to last Friday's close at $79.75. The brokerage firm said leaner inventory and the shift to direct-to-consumer should be tailwinds during Nike's upward earnings-per-share cycle.

Susquehanna also raised its Nike price target to $93, explaining the company is gaining market share from Adidas, and that it should meet its 2023 $50 billion revenue goal. There's certainly room for additionaly analysts to climb on the bullish bandwagon, too, which could fuel even more upside for NKE. At least half of those in coverage maintain a "neutral" or "sell" rating, while the average 12-month price target of $82.36 is in line with current levels.

Options traders, meanwhile, have been bracing for a NKE pullback by buying to open puts over calls at a quicker-than-usual clip recently -- though some of this activity could be shareholders initiating an options hedge. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 1.21 ranks in the 76th annual percentile.

Whatever the reason, it's an attractive time to buy premium on Nike options. The stock's 30-day at-the-money implied volatility of 17.5% ranks in the 3rd annual percentile, meaning short-term options are pricing in relatively low volatility expectations at the moment.

 

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