This is not surprising. After all, we just learned that Apple (AAPL) continued to struggle with its sales in China. It is not surprising that investors are worried about other exposed US companies.
However, Nike's stock keeps climbing. This is not different from a name such as Starbucks (SBUX). Although its activity in China is causing concern – both because of the slowdown in the Chinese economy and discussions on the US-China trade war – the actions of both companies continue to exert pressure.
Many investors are wondering if they missed their chance to get a long Nike, given the lack of a noticeable decline since Christmas. According to Oppenheimer analysts, there is still a lot of time. Analyst Brian Nagel has raised his price target on Nike to $ 90, from $ 90 to $ 90, and has kept him among the top picks with a note of outperformance.
Nagel is "even more impressed" by Nike's "underlying operational feats" and believes the company can continue to increase margins. A target price of 100 USD implies a rise of about 17 USD, a little over 20%. If Nike managed the feat, it will surely perform well this year.
The question is, can he do it?
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Nike Stock Trade
One year stock Nike chart
After going over $ 78 about a month ago, Nike's stock has been trending upwards in a relatively narrow range. Stocks have now reached their highest level since early October, shortly after Nike has surpassed $ 85-86. Shares closed Monday up 1.6% to $ 83.68.
To reach $ 100, we will eventually have to see this level collapse. How can we do it? It would not be the worst thing in the world to see Nike's action climb up to $ 85-86 and retreat. This would not be surprising given that stocks are already flirting with an overbought situation and that there is no big news, this level will likely lead to sellers and result in profit taking.
With profits not included in the calendar until the end of March, Nike will have to rely on investors to push the name higher, provided the overall market remains stable. A resolution of the trade war between the United States and China would also provoke a wave of purchases. On the other hand, a major deterioration in trade war talks could shatter Nike's stock.
No matter what happens in the future, I would like to see Nike recapture these highs again and consolidate its position in the $ 80 zone before attempting to cross the resistance again. If Nike's actions were to pass the resistance relatively quickly, it would be important for this former resistance zone to serve as a support. In the end, as long as NKE shares stay above $ 78 to $ 79, the long-term bulls should go.
Will Nike's stock reach $ 100? He needs some cards to fall in his favor, but it is certainly possible.