Nike's top-line beat is lifting the retail sector and the Dow
Nike Inc (NYSE:NKE) is the best Dow stock by far today, last seen up 14.8% to trade at $71.85. The retail giant reported adjusted fiscal fourth-quarter earnings of 14 cents per share on $11.10 billion in revenue, both of which topped analyst estimates, and is headed for its first positive post-earnings session in seven quarters. Nike said the worst effects of turnaround efforts are over, but did estimate that the cost of tariffs could be $1 billion in the current fiscal year.
Analysts have jumped on NKE in response. At last check, there were 10 price-target hikes, the highest coming from Evercore to $90 from $75. HSBC chimed in with an upgrade to "buy" from "hold" as well.
The report is so stellar that its offering a halo lift to retail sector peers Lululemon (LULU), Deckers Outdoor (DECK), and VF Corp (VFC). Retail exchange-traded fund (ETF) SPDR S&P Retail ETF (XRT) is up 1% as well.
This is poised to be Nike stock's best single-session gain since December 2022. The shares are breaking out of months-long consolidation, trading at their highest level since a March 21 post-earnings bear gap of 5.5%. Keep an eye on NKE's 200-day moving average, a trendline getting tested today amid the melt-up. Year-to-date, the equity is now down only 5%.
Options traders are responding in kind. At last check, over 271,000 calls have already changed hands this morning, volume that's 22 times the average intraday amount and more than double the number of puts traded. The weekly 6/27 70-strike call is the most popular, while the August 60 calls are also a top trade.
Nike has consistently exceeded options traders' volatility estimates, as reflected in its Schaeffer’s Volatility Scorecard (SVS) score of 82 out of 100. In other words, the security has historically delivered larger-than-expected price swings.