On Wednesday Nike (NKE) stock was up 8.76% adding $10.24 to its stock value and closed at $127.11.
The performance of Nike Inc (NYSE: NKE) stunned Wall Street yesterday as the sportswear maker’s stock surged over 8.7% on Wednesday. According to MarketWatch, the Nike (NKE) stock got the lift following expectations of a full fiscal year revenue forecast that is expected to be up by about a high single-digit or a low double-digit.
The company is one of Wall Street’s outfits to altered the mode of its operation due to the coronavirus pandemic, the company reported better than expected sales in its first-quarter earnings report. With its embrace for digital service, the company reported a massive 82% jump in its online sales consolidating the 12% growth in the direct sales involving both in-stores and online sales. This performance is one of the major factors which is positively influencing Nike’s (NKE) stock price at the moment.
On the backdrop of better than expected profitability, Nike’s Chief Financial Officer Matthew Friend gave an earnings call that caused the company’s investors to become bullish on the stock. “Stronger-than-anticipated demand for our brands will be constrained in the near term due to supply decisions we took in the face of the pandemic, with growth in the second half to be up significantly versus prior year,” He said, adding;
“Our gross margin outlook will continue to be a function of prioritizing a return to normalized inventory levels by the end of Q2. In the second half, we expect to begin seeing sequential improvement in full-price sales, but we do expect a continuation of higher markdown activity in our factory stores to sustain conversion rates on lower traffic.”
Since these pronouncements, Nike (NKE) stock is up 8.76% adding $10.24 to its stock to close at $127.11 on Wednesday.
What Analysts Say as Nike Stock Up
Quite unusual for a company to stay bullish at a turbulent time as this with new cases of COVID-19 causing a market-wide scare. In the case of Nike (NKE), the shares are at their peak in 3 months with a 26% raise, a move that has stirred analysts’ reactions.
“Nike’s 1Q beat continues to showcase how the company’s size and scale offers a structural long-term competitive advantage deploying its moat-digging budget across research and development and marketing to go deeper into customers’ wallets, stretching its competitive set from athletic peers, to anyone that sells footwear and apparel, all while improving its direct and wholesale distribution. Clearly the shares are expensive, but they are expensive for a reason, and we expect them to continue compounding,” BMO Capital Markets analysts led by Simeon Siegel said in a note to clients.
Nike’s move to boost its digital channels has also earned it accolades from UBS analysts led by Jay Sole. “The key is Nike’s transition to digital selling is happening much faster than we anticipated,” Sole said. “Importantly, we think this transformation is just getting started and will drive better-than-expected sales growth and margin expansion well into the out-years.”
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Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.