What Makes Merrill Lynch Look At Nike?

According to the world clothing shoes and hats net, in Adidas AG (ADS.DE)

With the strong performance of competitors such as the group, a few investment banks are the biggest in the world.

Group Nike Inc. (NYSE:NKE)

The outlook for the group began to turn pessimistic.

This week's Bank of America Merrill Lynch (NYSE:BAC) Meilin Merrill Lynch's latest report still maintains a rating on the Nike Inc. Inc. Nike group's big market, with a target price of only $42.

According to the bank, Nike Inc. Nike group's high inventory and market share were snatching by Adidas AG, Adidas group and weak sales of key high-end products, all of which laid hidden dangers for the upcoming major sales festival of the coming year - the return to school season.

In the three quarter earnings report released at the end of March, Nike Inc. Nike group said that the futures orders of the group's Nike Nike Nike brand in the next six months were recorded a decrease of 4%, while the fixed exchange rate narrowed to 1%, but still far less than the 3.5% growth expected by the comprehensive Metrix analyst of the research institution.

With the consumer market turning to sports and leisure, the advantages of Nike Inc. Nike group in the presence of Adidas AG Adidas group have shown that they are even at a disadvantage, and the share of Nike Jordan Nike and Jordan brands in the basketball category is also eroded by Under Armour Inc. (NYSE:UA) Andrew, compared with the market that did not exist in the past 3 or 5 years. The growth prospects of the Nike Nike group are being closely watched by investors and analysts.

In the three quarter ended February 28, 2017, the Group recorded only 5% of its revenue growth, and the income of $8 billion 430 million was also less than the $8 billion 470 million expected by the market.

Brian Yarbrough analyst Edward Jones pointed out that the three quarter performance can not be seen that they can restore the hope of rapid growth in the past.

In the three quarter, the fixed exchange rate of Nike Inc., Nike group's overall revenue rose 7% compared to the same period, and Nike's Nike brand also recorded a 7% increase, earning 7 billion 900 million dollars.

The brand has double digit growth in Western Europe, Greater China and emerging markets, as well as two categories of Sportswear and Jordan Brand, but the core North American market has increased by only 3%. Edward Jones, an analyst, believes that such a margin is not qualified.

Data show that in the last four quarters, the fixed exchange rate Adidas AG AG group's North American market sales growth rate of 29%, Puma SE (PUM.DE) Puma growth rate has also reached 9.9%, even Under Armour Inc. Andrea 5.9% growth is also stronger than the Nike Nike brand.

Nike Inc., CEO of Nike group Mark Parker Parker, pointed out that the growing trend of online shopping has made traditional physical retail more difficult. In the short term, the discount environment will deteriorate, and they are working to improve the efficiency of selling and accelerating product innovation and delivery directly to deal with changes in consumer habits, and they will also reduce product supply in the North American market.

On the other hand, although the three quarter has maintained a relatively rapid growth of 15% in the Greater China region, there is also uncertainty.

In this year's CCTV 315 evening party, Nike Nike brand became one of the key words. The Kobe Bryant, Kirby Brian, and its engraving basketball shoes of the brand were not installed as air cushion as propaganda. Whether it was regarded as the largest sport brand in the world, it was treated by Chinese consumers as "water fish". Whether scandals were treated by the national media before the exposure of the buyers and the problems were chilling. In the current competitive sports market, 315 or enough to silence one of the most famous brands in the world.

Now, however, it is only 3 years from Nike Inc., Nike group to the annual target of 50 billion dollars in 2020 fiscal year. In order to achieve this goal, the group must achieve an annual revenue growth of at least 10%. However, since its release in October 2015, the group has failed to meet the target.

Similarly, the group's share price fell for the first time in 2016 in the past 8 years due to slower growth.

Nike Inc. Nike group is still weak in the North American home market. China also has worries after the 315 incident.

However, there are still a lot of gratifying places for Nike Inc. Nike group, two of which are particularly important.

First and foremost, the sports industry of Nike Inc., Nike group is still far better than the overall consumer market. Although most brands show signs of slowing down, its growth rate is still considerable, and it is still difficult to see the fever in the near future. But there are also worries that most clothing industry brands, such as Zara, H&M and Gap, are beginning to get involved in the relevant brands. The fast fashion brands have obvious price advantages, the design of fashion leisure and the lower prices are also accepted by non professional sports fans.

Nike Inc., Nike group's lower share price and P/E also make many investors think the group is full of value. The rating of Wall Street investment bank is still dominated by buying. By the end of May 25th, MarkteBeat data showed that 23 of the 37 major investment banks rated 2 as "buy" and "sell", while the other 13 were "holding".

The average target price given by the investment banks is 61 US dollars, which is 17.29% higher than that of the group's closing price of 52.01 dollars on Thursday.

In contrast, the Adidas AG Adidas group, which is now in a positive momentum, has strong performance in support of the group's share price soaring 130% in the past two years, and its P/E currently stands at 30.88, much higher than that of Nike Inc. Nike group.

The current high price of Adidas AG, Adidas group has already made the market feel at risk. Although the stock has risen 13% this year, the group's share price has dropped by about 6% since its first quarter results in early May.

Therefore, from the perspective of investment, Nike Inc. Nike group is more attractive at the same time, and at the same time, it has less risk.

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