Nike got a rating boost from a Goldman Sachs analyst , on what the latter thinks is strong growth prospect in China.
Goldman Sachs analyst Alexandra Walvis upgraded the sports footwear and apparel maker’s stock to buy from neutral. Walvis also raised her price target to $112 from $95.
According to Walvis, a bottom-up analysis led the team to believe that Nike’s revenue growth in China could be in high-teens digits. Direct-to-consumer is the biggest driver, reaching 50% of the region’s revenue on the analyst’s estimates by 2023.
“Chinese activewear market will deliver double-digit growth," Walvis said. Walvis also highlighted that Chinese sportswear spend per capita was $30 in 2018, compared with the U.S.'s $350. Activewear represented 11% of total apparel and footwear spend in China in 2018, compared with 33% in the U.S.
Walvis now expects earnings per share to grow 19% for each of the next three years.