UBS believes Nike's (NYSE:NKE) stock price "could double" if the company performs according to its long-term sales and margin targets.
Analysts at UBS, who have a Buy rating and $150 price target on the stock, said that following a management meeting, their takeaway is that the sportswear giant's "long-term sales and margin targets are still very achievable."
"If Nike were to reach these targets by FY26, EPS could reach at least $6.50. This is more than 2x the $3.23 Nike earned in FY23. If the stock holds its P/E, then the stock could double," wrote the analysts.
"While this scenario is closer to our "bull case" vs. our base case view which incorporates a global macro slowdown, it still has a reasonable probability of playing out. This is a main reason we rate Nike Buy and think it offers a very attractive risk/reward, even at its current 29x P/E," they added.
UBS has a high conviction, based on its conversations with investors, that the stock is not pricing in close to $6.50 in FY26 EPS.
The investment bank anticipates that as soon as the market starts to sense 2nd derivative sales growth rate and margin improvement, the stock will start moving higher. "This could happen when Nike reports Q1 earnings in late September or even sooner," revealed the analysts.