Category Archives: NKE

According to Dan Burrow in an article titled “Nike Inc (NKE) Stock Looks Ready to Bottom Out” dated October 26, 2016, it is suggest that the decline in the stock is overdone.  Burrow says that Nike “…fell in sympathy with Under Armour…” which brought the stock to a new 52-week low.  However, in Burrow’s own piece on Nike, he says that “Nike stock cratered after it did a face plant with orders for future delivery when it reported quarterly results earlier this month” suggesting that in reality, Nike is also experiencing difficulties that are industry wide rather than relegated to issues with Under Armour. 

According to Burrow, “Nike’s problems are real, but probably not as bad as the stock performance would suggest. It’s also no UA stock, which plummeted in large part because of a very rich valuation.”  However, looking at the Value Line Investment Survey dated January 29, 2016, analyst Craig Sirois said of Nike, “…we think longer-term investors should stay on the sidelines based on the issue’s high valuation.”  Contrasting Value Line Investment Survey’s view that Nike was overvalued in January 2016 and has subsequently fallen –16% suggests that Nike has more room to the downside in recognition of the realities in the industry.

As S.A. Nelson said:

"...stocks have recovered after artificial depression and relapsed after artificial advances to the middle point which represented value as it was understood by those who bought or held as investors."

With the above about “artificial advance”, a feature of stocks that are overvalued , we have indicated the downside targets for Nike based on the work of Edson Gould.