Credit Suisse raised their target price on Nike (NKE) from $75 to $85 and reiterated their OUTPERFORM rating. While Nike provides an attractive profile to investors hoping to weather the US recession (international exposure, dominant market share, and smooth operations), Credit Suisse does not see the stock suffering when the recession ends and other retailers more reliant on the US economy recover:
However, if and when this recession ends, many assume that Nike will fall into the dreaded group of “defensive” stocks that traditionally underperform as investors rotate into high-beta U.S. retail stocks. We disagree and think that Nike will be a great stock to own post the recession for one simple reason: most of the world’s consumption growth over the next decade will come from outside of the U.S….
CS sees Nike as a firm extremely well-positioned to capitalise on China’s growth:
…Nike is one of the best positioned franchises to capitalise on this mega shift in trend. We expect China in particular to be the single biggest driver of global consumption over the next 10 years, a consumer market that could eclipse $4 trillion by 2015 versus $1 trillion now and compared to nearly $10 trillion in the U.S. today.
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