Is it time to invest in Nike stock as Goldman initiates coverage with a buy rating?

On Tuesday, Nike Inc. (NYSE:NKE) shares edged higher 1.2% after receiving a buy rating from Goldman Sachs. The firm initiated NKE coverage, saying the stock is undervalued whilst issuing a price target of $172.00 per share.

Analyst Kate McShane and the Goldman team cited a healthy industry backdrop and the company’s continued innovation as a significant catalyst for growth. Moreover, Nike’s huge cash balances are seen supporting re-investment whilst also returning capital to shareholders.

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Nike shares are up 8.54% this year after pulling back more than 12% since the 12th of August. As a result, McShane sees more share price upside, thus presenting an opportunity for investors to buy.

Time to bet on NKE’s growth prospects?

From an investment perspective, Nike shares trade at a trailing 12-month P/E of 39.93 and a forward P/E of 31.60. Therefore, value investors may opt to monitor the stock before buying. 

However, analysts expect Nike’s earnings per share to grow by more than 123% this year before rising by a further 33% next year. As a result, growth investors could find the stock as an exciting addition to their portfolios.

Is a channel breakout imminent?

Technically, Nike shares seem to be trading within a descending channel formation in the intraday chart. However, the stock recently bounced off the trendline support to surge towards the 100-day moving average.

Nonetheless, with shares still far from reaching overbought conditions, investors could target extended gains at about $158.27 or higher at $165.52, while $146.53 and $138.93 are solid support levels.

Nike’s growth is exciting

In summary, although Nike shares seem to be trading under significant downward pressure, the stock appears to have recently bounced back to surge closer to the 100-day MA.

Moreover, given Nike’s attractive earnings growth prospects, the rebound appears to have significant catalysts to drive the stock price higher. In addition, investors could be looking to buy the stock before the price reaches the overbought conditions of the 14-day RSI.

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