Nike Inc (NYSE: NKE) has done incredibly well in recent months but the stock is still trading at a bit of a discount, says Stephanie Link. She’s the Chief Investment Strategist at Hightower Advisors.
Nike’s DTC push will help boost margins
Link is particularly bullish on the multinational’s direct-to-consumer business that she’s convinced will continue to help improve margins in the coming quarters. On CNBC’s “Squawk Box”, she said:
The real story is DTC. It’s about 27% of total revenues. As they transition to DTC, this means you’ll see better margins. That’s we got last quarter and that’s what I think the story is for the next year or two.
Nike is scheduled to report its Q3 results next month. Consensus is for it to earn 50 cents a share this quarter versus 87 cents per share a year ago.
For the year, Nike stock is up more than 5.0% at writing.
Nike will benefit from China reopening
Moving forward, Nike Inc could see a boost to its financial performance now that China is pulling out of its stringent COVID restrictions. That will also translate to a higher stock price, Link added.
It’s the industry behemoth. They have a very strong pipeline. And if you think that China is going to reopen and it’s going to be sustainable, they have about 15% of their total revenues in China.
Earlier this week, Incline Global Management LLC confirmed that it increased its position in Nike by 92.9% in the third quarter.
Link’s constructive view is in line with Wall Street that also currently rates Nike stock at “overweight”.
The post Stephanie Link’s bull case for Nike stock appeared first on Invezz.