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Raymond James started Nike (NYSE:NKE) with an Outperform rating and Lululemon Athletica (NASDAQ:LULU) with a Strong Buy rating in a note focused on global athletic brands on Thursday.
Raymond James analysts set a price target of $345 on Lululemon, telling investors the firm thinks it is one of the highest quality companies among global brands “with a strong yet still emerging brand that should double revenue from 2021-2026.”
“LULU has one of the highest growth rates among peers as it scales its core business further while also diversifying across channels, geographies, and categories. Its operating margins are amongst the highest of global brands, and we see room for expansion with a strong topline, which should enable EPS growth (estimate +20% CAGR in 2021-2024) to outpace revenue (+estimate +17% CAGR from 2021-2024),” they wrote.
“We expect LULU’s visionary management team (led by Calvin McDonald), history of solid execution, and consistency of strong results to continue driving positive momentum,” they added.
On Nike, the analysts assigned a $99 per share price target. They assigned Nike’s share price decline to the negative impact of elevated inventories for Nike and the category, China weakness from its COVID policy, and general concerns about the consumer.
“NKE’s guidance (midpoint) implies it plans to have $7B+ more in revenue in FY23 versus the four quarters pre-COVID, but only $100M more in EBIT over the same period. Following the guide-down in F1Q23, we believe much of the bad news is priced into the stock. Importantly, we view Nike’s underlying demand and brand strength as strong based on our survey of >525 consumers,” the analysts wrote.
“Big picture, we see NKE in the middle innings of a multi-year journey to transform into a direct-to-consumer model.”
