A Game Changer: Jim Cramer’s Latest Top 10 Stock Picks

5. NIKE Inc. (NYSE:NKE)

Number of Hedge Fund Investors: 66

Jim Cramer notes that Bernstein has reduced its price target for NIKE Inc. (NYSE:NKE) from $112 to $109 per share while maintaining an outperform buy rating. The analysts cited concerns raised by former NIKE Inc. (NYSE:NKE) executives as the reason for this adjustment.

“Bernstein trimmed its Nike price target to $109 per share from $112 and kept its outperform buy rating. The analysts cited concerns they heard from former Nike executives.”

NIKE, Inc. (NYSE:NKE) is a leading brand in athletic footwear and apparel, and there are several reasons to be optimistic about its future. In its Q2 2024 earnings report, NIKE, Inc. (NYSE:NKE) announced a 10% increase in total revenues to $13.3 billion, with net income rising to $1.5 billion. A key highlight was a 20% growth in direct-to-consumer sales, demonstrating the effectiveness of its online sales strategy. NIKE, Inc. (NYSE:NKE) is also focused on innovation, launching new products made from sustainable materials that resonate with younger consumers, especially Gen Z and millennials.

Furthermore, NIKE, Inc. (NYSE:NKE) is expanding into emerging markets like Asia and Latin America, where interest in premium athletic gear is on the rise. Strategic partnerships with well-known athletes and influencers have boosted its brand visibility and attractiveness. NIKE, Inc. (NYSE:NKE)’s commitment to sustainability matches current consumer preferences for eco-friendly brands, which could help attract more customers.

Mar Vista Focus strategy stated the following regarding NIKE, Inc. (NYSE:NKE) in its Q2 2024 investor letter:

“NIKE, Inc.’s (NYSE:NKE) stock declined following management’s revised forecast for fiscal year 2025, projecting negative mid-single-digit revenue growth instead of the previously anticipated positive growth. The company has observed a marked slowdown in lifestyle product sales since April, a trend that persisted into June. Our current projections indicate that both sales and earnings will fall 15-20% below the conservative estimates set by management just a quarter ago.

This substantial downward revision in sales and earnings is attributed to insufficient product innovation, wholesale channel shift, and intentional reduction of supply in lifestyle franchises. While the negative adjustments to guidance could potentially act as a clearing event for the stock, the degree of conservatism in the new projections remains uncertain.

Nike maintains its position as the global leader in sportswear. However, its revenue growth has been hampered by a lack of innovation, and its recovery is further complicated by deteriorating macroeconomic conditions in the US and China. The company’s renewed focus on innovation and efforts to re-engage with wholesale channels may eventually help restore growth, but we believe increased skepticism regarding management’s ability to execute is justified.”