Nike Inc. (NYSE: NKE) gets an Overweight rating

Nike Inc. (NYSE: NKE) stock fell 4.71% (As on June 16, 11:32:22 AM UTC-4, Source: Google Finance) after Morgan Stanley resumed coverage with an Overweight rating and a $159 price target. They currently have a $159.00 price objective on the footwear maker’s stock. Morgan Stanley’s price target indicates a potential upside of 43.61% from the stock’s previous close.

Meanwhile, revenues for NIKE, Inc. increased 5 percent to $10.9 billion compared to the prior year and were up 8 percent on a currency-neutral basis. Revenues for the NIKE Brand were $10.3 billion, up 8 percent compared to prior year on a currency-neutral basis, led by 13 percent growth in EMEA. Revenues for Converse were $567 million, down 1 percent on a reported basis and up 2 percent on a currency-neutral basis, led by strong performance in North America and Europe, partially offset by declines in Asia. Net income was $1.4 billion, down 4 percent. Inventories for NIKE, Inc. were $7.7 billion, up 15 percent compared to the prior year period, driven by elevated in-transit inventories due to extended lead times from ongoing supply chain disruptions, partially offset by strong consumer demand during the quarter.  Cash and equivalents and short-term investments were $13.5 billion, up approximately $939 million from last year, driven by strong free cash flow, partially offset by share repurchases and cash dividends.

Moreover, in Q3, Digital revenue was up 22% on a currency-neutral basis, as the company continues to drive greater competitive separation, particularly through the app ecosystem. The Nike App was up more than 50% in the quarter and overtook on mobile for the highest share of Digital demand. And SNKRS continues to gain momentum, particularly as its strong consumer engagement leads to improved conversion. The livestreaming on SNKRS remains incredibly popular, with new features continuously coming online.

Additionally, all factories in Vietnam are operational, with total footwear and apparel production in line with pre-closure volumes and the forward looking demand plans. Nearly all of the supplier base is operational without restrictions, and the company is working closely with the partners around the world to navigate through the most recent risks related to COVID. Now consumer demand for all three of the brands – Nike, Jordan and Converse – remains incredibly strong. The company is investing in Nike stores to specifically address gaps in distribution to serve the growth opportunities the company sees in Women’s, Apparel and Jordan.

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