Opinions Stephanie Link, Chief investment strategist, Hightower
Nike IncNKEPARTIAL SELLDec 22, 2023
Stock price when the opinion was issued
As of Jun 08, 2026. Market Open.
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Several levels of trouble. He added recently ~$45. Not looking for homeruns. Potential for it to get back up to mid-upper $50s is realistic. Still very expensive at 30x forward PE. Unless they can figure out the China headwinds, it will struggle. Every time it rallies, it's likely to a lower high. Selloffs will be to lower lows.
Growth story for decades, but now a mature clothing company. A trade, not an investment.
He had bought NKE as a turnaround story, which didn't really play out so he exited. Both are retail turnarounds with very strong brands. Logistically, it's very hard to turn around a brand and rejig the supply chain. These turnarounds take longer, with significantly more risk. (Compare that to a TD, which just had to cope with the one-time charge of a financial penalty.)
For NKE, with growing anti-American sentiment it could be hard to turn things around. LULU could, sometime, be a takeout target by private equity or another retailer. But that's not a reason to buy, especially when earnings and cashflow are still declining.
The principle of buying stocks whose products you use makes a great deal of sense. Eventually these things will turn around. But a stock that's been in decline for half a decade usually takes a bit of time to bounce back, and would probably need to build a bit of a base. (Whereas short, sharp declines can have short, sharp rebounds.)
Insider buying is a good sign. Likes US brands. Notwithstanding sentiment toward the US at this time, there's still an interest in the US as more investors are able to invest (such as Korea).
She just bought Nike. She seldom buys retail names, but she feels the new CEO is on track to turn Nike around. Earnings were actually good, but the stock got hammered on its China numbers were a pure miss. Nike just needs to get incrementally better. World Cup numbers are up. Businesses in individual countries will be given more autonomy in branding and footprint. In the US, running shoes were up 20%. Are focusing more on women. She targets $75-80. It's cheap here. Board members are buying shares. If the Supreme Court goes against Trump in IEEPA (which grants him sweeping tariff powers), these retail stocks will fly.
Bryn Talkington
Nike reported and disappointed. Shares falling 11% today. She was terrified going into the quarter, which wasn't terrible. Expected flat revenue growth, yes, but profits beat her expectation. But the outlook was not good. She expects they'll eventually reach around 10% growth, but doesn't know when. They have a product cycle in 2024, but that will take time to get into the system. It's dead money for 6 months or more. This remains 27% up from lows. Is taking profits, though is not buying other stocks during this rally. Expectations, especially over margins, were so high going into this report.