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Nike Can Reach Long-Term Targets and Double Stock Price, Says UBS
Nike Stock Reiterated as Buy with $150 Price Target
UBS, a global investment bank, has reiterated its buy rating on Nike stock and set a price target of $150 per share. This implies a potential upside of nearly 38% from Monday's closing price of $108.77. Despite a recent 8% slump in the stock, underperforming the broader market, UBS sees long-term potential for Nike to double its stock price.
Potential for Earnings Growth
UBS analyst Jay Sole believes that if Nike can achieve its company targets for fiscal year 2026, earnings per share could reach $6.50. This would create a strong case for the stock to double in value, especially if the stock maintains its current price-to-earnings ratio. Although this scenario is part of UBS's more optimistic outlook, it still has a reasonable probability of playing out.
Strong Performance in China and Growth Driver
According to UBS, Nike has demonstrated a strong performance in China, where it remains the number one brand. Additionally, the analyst highlights the Jordan segment as a strong growth driver for the company overall. As market confidence grows in Nike's second derivative sales growth rate and margin improvement, the stock is expected to move higher.
Potential Catalyst for Stock Movement
UBS anticipates that Nike's upcoming Q1 earnings report in late September could serve as a catalyst for stock movement. Positive results and outlook could further boost investor confidence and drive the stock price higher.
In conclusion, UBS believes that Nike has the potential to achieve its long-term targets and double its stock price. The company's strong performance in China and the growth potential of its Jordan segment provide additional reasons for optimism. Investors will be closely watching Nike's Q1 earnings report for further indication of the company's direction and future prospects.
Conclusion: Opportunity for New Businesses in the Athletic Apparel Industry
The positive outlook on Nike's long-term growth potential provided by UBS presents an exciting opportunity for new businesses looking to enter the athletic apparel industry. With Nike being a dominant player in the market, its projected ability to double its stock price and achieve strong earnings growth sends a signal to investors and entrepreneurs alike.
UBS's emphasis on Nike's strong performance in China is particularly noteworthy, as it remains the number one brand in the country. This demonstrates the significant market potential in China for companies operating in the athletic apparel sector. New businesses could consider targeting this market and capitalizing on the growing demand for sports footwear and apparel.
Furthermore, UBS highlights the growth potential of Nike's Jordan segment, which could serve as a valuable lesson for new businesses. Identifying niche segments within the broader industry could provide an avenue for differentiation and sustained growth.
As investors continue to monitor Nike's quarterly earnings reports, the stock's performance could have a ripple effect on the industry as a whole. Positive results and a favorable outlook could boost investor confidence and lead to increased demand for athletic apparel stocks.
In conclusion, the positive outlook for Nike's long-term growth potential not only bodes well for existing industry leaders but also presents an opportunity for new businesses to enter the athletic apparel market. By targeting lucrative markets like China and identifying niche segments for growth, entrepreneurs can position themselves for success in an industry poised for continued expansion.
Article First Published at: https://www.cnbc.com/2023/07/25/how-shares-of-this-consumer-stock-could-double-according-to-ubs.html.svg)
