UBS analyst Jay Sole reiterated a Buy rating on Nike (NYSE: NKE ) after attending an investor meeting in New York together with Matt Friend, EVP and CFO at Nike, and Paul Trussell, VP, Investor Relations & Strategic Finance.
The analyst came away positive from the discussions with the management.
“We believe North America demand remains very strong, particularly in digital channels, and Nike's inventory levels are lean. Plus, Nike's manufacturing partners have likely returned to high capacity utilization rates. While China lockdowns have likely had an impact on sales and supply chain transportation issues probably remain problematic, we think these are contemplated in Nike's guidance,” Sole said in a client note.
Sole’s 3 key takeaways from the event are:
1) Robust innovation pipeline, particularly in the running category;
2) The market underestimates Nike's ability to improve gross margin by better utilizing inventory; and
3) The "Manufacturing Revolution" is not over.
“Nike will be a long-term outperformer, in our view. The company's investments in product innovation, supply chain speed, and digital are unlocking what is likely a multiyear period of above average growth,” Sole concluded.
By Senad Karaahmetovic
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