Due to the low growth rate in the U.S., Nike is no longer an appealing investment, even though the company is up by more than 17 percent this year.
HSBC analyst Erwan Rambourg looked down on the stock and gave our sell signals due to valuation concerns.
The analyst believes although the company has a compelling future and that sentiment around the stock can still think that the sentiment around the stock may once again turn into positive.
The company’s shares are up by 17 percent this year through Monday’s early session compared with the S&P 500’s 16 percent return. The stock has risen by more than 10 percent since Nike gave-teens annual earnings-per-share growth guidance for the next five years.
Nike shares was down by 1.7 percent in Tuesday’s premarket estimate to trade at $2.46 from $2.60 and was even pushed farther down and is expected to $35.3 billion from $36.8 billion for the same year.
Rambourg noted that Nike’s forward price-to-earnings multiple now matches Adidas’ even though its progress is moving more slowly than its competitor.
Rambourg also reaffirmed his $62 price estimated target for Nike shares, even though Nike shares declines by 1.7 percent, which mean that it would be an upside of 4 percent from monday’s close.
He also thinks that although there is a lower growth rate in the U.S. And an uncertain present is the reason for the downgrade.