Nike leads Dow Jones higher after upgrade, $93 price target
- Nike stock gains 4% on JPMorgan upgrade.
- Analyst Matthew Boss gives NKE shares a $93 price target.
- JPMorgan cites return to form as inventory issues worked through.
- Trump trade agreement with EU a positive sign for equities.
Nike (NKE) stock is off to the races on Monday as the athletic brand surges over 4% in response to a bullish turn from JPMorgan. The venerated investment bank came out with a $93 price target on the down-on-its-luck footwear company.
Nike stock rose within spitting distance of the $80 psychological level it hasn't touched since March 10 of this year.
The Dow Jones Industrial Average (DJIA), which holds Nike as a constituent, is slightly ahead with Nike's urging despite measured pullbacks from Travelers (TRV), Cisco (CSCO) and Verizon (VZ). The market overall is cautiously optimistic at the start of the week after President Trump inked a 15% tariff deal with the European Union (EU) over the weekend. Trump also said on Monday that other countries who had not yet signed trade deals would get 15% to 20% tariff rates come August 1, another sign that the worst possibilities might be over.
Traders are looking ahead to the June JOLTS Job Openings report on Tuesday, Wednesday's Federal Reserve (Fed) interest rate decision and press conference, and the July Nonfarm Payrolls report on Friday.
Nike stock news
After a long bout of switching management and working through overhang from inventory liquidation issues, JPMorgan analyst Matthew Boss expects revenues to rise over the next 18 months as Nike returns to a better performance interval.
"Further, we see opportunity for NKE to recapture over 500bps of operating margin erosion on improved full-price selling & reception to new product innovation, and as NKE begins to leverage on SG&A expenses with an inflection to topline growth," Boss wrote in a client memo, attaching a $93 price target to NKE shares.
The price target does seem high as it comes from offering Nike stock a 37x multiple to estimated fiscal 2027 earnings per share (EPS) of $2.49.
After the Trump administration this summer finalized a trade agreement with Vietnam, where Nike produces the majority of its products, Nike management seems less worried about tariffs, announcing that it will mitigate the higher costs via arrangements with suppliers, price increases, and corporate downsizing.
Nike stock forecast
Nike shares are approaching the $80 price level, but bulls will look for a retest of the $82.44 resistance last tested it on February 26. Meanwhile, the 200-day is gliding along near $71.00, and the stock appears to be overbought on the Relative Strength Index (RSI) with a reading of 71.
NKE daily stock chart
The long-term downward trending price channel on the weekly chart below tells us that the bearish structure is now behind us. Bulls will hope that an upward sloping price channel will be formed in its space, but the first necessary evidence will be a confirmed close above the $82.44 level, marking a new higher high for the first time in four years.
NKE weekly stock chart
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Author
Clay Webster
FXStreet
Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.
