Earnings Beat, Analyst Upgrades Send NKE Shares Sprinting

J.P. Morgan upgraded the blue-chip stock to "overweight" from "neutral"

Deputy Editor
Dec 21, 2018 at 10:33 AM
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Shares of Nike Inc (NYSE:NKE) are up nearly 9% at $73.48 in early trading, after the company announced its fiscal second-quarter earnings results last night. The Dow component reported strong online sales in North America, as well as quarterly revenue and profit that beat analyst expectations. J.P. Morgan Securities and Pivotal Research have already raised their ratings on the footwear giant, too -- with the former lifting NKE to "overweight" from "neutral," and the latter raising its rating to "buy" from "hold."

NKE shares have pulled back recently, moving in step with the broader market sell-off. The shoe stock is down about 17% from its September all-time high of $86.00, but sports a year-to-date gain of 17.5% -- comfortably surpassing the roughly 6% losses racked up by the Dow and S&P 500 Index (SPX) for 2018 to date. In fact, with just over a week to go until the year is over, NKE stands out as the No. 4 top-performing Dow component of 2018.

In accordance with this standout price action, J.P. Morgan and Pivotal aren't the only analysts taking a bullish stance on NKE. Of the 23 brokerage firms following the stock, 14 give it a "buy" or better rating. What's more, the 12-month consensus price target of $86.79 implies expected upside of 18.1% to current levels. 

Short interest on NKE rose 14.7% in the most recent reporting period, suggesting some bears think the stock has reached a top. However, it was the equity's now near-the-money December 75 call that saw the biggest open interest increase in the 10 trading days leading up to earnings, per Trade-Alert, with 2,629 contracts added at this just-overhead strike since Dec. 10.

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