By Christiana Sciaudone
Investing.com -- Nike (NYSE:NKE) rose to a record after reporting stellar results and a strong outlook, and getting price target bumps from several analysts. Morgan Stanley (NYSE:MS) said revenue estimates may be far below true potential.
Earnings per share of 78 cents beat the 62 cent estimate on sales of $11.24 billion, which compares to the expected $10.55 billion. Second quarter revenue was up 9% compared to the prior year, led by Greater China where sales grew 24%. Brand digital sales increased 84%, with triple-digit growth in North America.
"We are increasing our full year outlook for revenue and now expect low teens growth versus the prior year," said Chief Financial Officer Matt Friend in the earnings call on Friday. "Our gross margin outlook is also improving, with stronger than planned return to normalized inventory levels and lower than expected markdown activity across our portfolio. For the full year, we now expect gross margin to expand up to fifty basis points versus the prior year, including 35 basis points of foreign exchange headwinds."
Morgan Stanley increased the price target to $176 from $165 on the good guidance. Analyst Kimberly Greenberger said that although valuation multiples are high, out-year revenue forecasts may be as much as $3 billion too low, according to StreetInsider.
Credit Suisse (SIX:CSGN) reiterated a buy-equivalent rating on the stock and raised the price target on the sneaker maker to $162 from $160, citing strong sales and better-than-expected cost management.
Analyst Michael Binetti said the firm sees strong potential for the second half above guidance and positive revisions to consensus margin estimates for "several" quarters, according to StreetInsider.