Nike: For now, hold shares

Posted Sep 14th 2009 5:20PM by Joseph Lazzaro
Filed under: NIKE, Inc'B' (NKE)

Nike has strong fundamentals, an exceptional brand, and ample opportunities to expand in emerging markets. And yet the stock has meandered for the better part of four months -- straddling the critical 50-day moving average. What's going on here?

More than likely, institutional investors are concerned that Nike, Inc. (NYSE: NKE) will fall prey to consumer pull-back, even though 60% of the company's sales are outside the now 'frugal consumer' U.S.

Hence, I'm placing a Hold rating on Nike, first recommended on May 12, 2009 at a price of $50.98. I'll await the current quarter's results, as well as information on demand conditions in key emerging markets, before deciding to recommend the shares or kick it. The First Call FY2010/FY2011 EPS estimates for NKE are $3.52 to $3.89.

Stock Analysis: Nike is a moderate-risk stock. If you've already purchased the company's shares, hold them. If you haven't, don't buy shares at this time. Sell/Stop Loss if you bought shares in this company: $43.

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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.

Tags: footwear, nike, shoes