Investment Research Equity Research
April 4, 2004 Recommendation: Sector: Industry: BUY
Consumer Cyclical Footwear 76.64 78.56 49.60 263.12M .80 20.17B 10,697M 21.66% $94.85
Price: 52 – Week High: 52 – Week Low: Shares Out (mil): Dividend: Market Cap: 2003 Revenue: Project EPS Growth: 2005 Target Price:
Rudy Dermesropian email@example.com Jason A. Drago Jdrag636@stjohns.edu Gintare Grigaite Gintare.firstname.lastname@example.org Tennille Lopez Tennille.email@example.com • • The stock is currently undervalued at a price of $76.64. Our 2005 target price is $94.85. In 2003, NIKE reported revenues of $10.7 billion, an 8 percent increase from FY'02. The best year of the company's 31-year history. NIKE is ranked # 1 in the footwear industry NIKE’s Market Capitalization is 20.17B compared to 2.49B of leading competitor Reebok and 334.60M for the entire Industry. Net income had risen 61% as demand for sneakers surged in March of 2004.
We are recommending the purchase of 150 of shares of NIKE on limit order at $70 and 150 shares at market order for the following reasons: • • • • We have set the target price at $94.85, based on our P/E average of 24.70 by our 2005 estimated EPS of $3.84 The stock is currently undervalued at a price of 76.64 (April 4th 2003). Our calculations indicate that Nike’s intrinsic value is $88.10 The continuous increase in dividends throughout the years The 21% increase in third quarter revenues and the expectation of higher figures for the overall year.
NIKE, Inc. is engaged in the design, development and worldwide marketing of footwear, apparel, equipment and accessory products. It sells its products to approximately 18,000 retail accounts in the United States and through a mix of independent distributors, licensees and subsidiaries in nearly 200 countries. NIKE's athletic footwear products are designed for specific