Nike: Awaiting a Substantial Discount for a Trade Entry

about 1 month ago

"Nike is down 57% over the last 5 years. I've been, you know, bearish on Nike since 2023 pretty much. For my valuation model, I'm taking $3.7 for 2028 and I'm putting in another two years after that of 15% in earnings per share growth. I get the 5-year earnings per share target at $46 and, with Nike trading at 30 times earnings, that would be $121 per share. But for me to get a double on this scenario, I would have to buy Nike at about $50 per share. So if it gets to $50 or below, it would be offering some margin of safety."

The analyst expresses a bearish stance on Nike, noting that despite recent improvements in certain regions, the company's revenue declines and overextended multiples make it unattractive at current pricing. The actionable trade idea is to consider buying only if the share price drops to around $50, which would provide a margin of safety and improved upside potential over a 5-year horizon.

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