Buy on a pullback because record highs are coming: Trader

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Nike stock took a break from its record run.

Shares fell 4% last week, retreating further from their highs set in mid-December.

The stock is up 45% in the past six months, supported by an athleisure trend that accelerated during the pandemic and an e-commerce strategy that gained traction.

Danielle Shay, director of options at Simpler Trading, says the outperformance is just beginning.

“I think that trend is continuing,” Shay told CNBC’s “Trading Nation” on Friday. “People have changed, consumers have changed and everyone is working from home. Everyone loves Nike. They have done a fantastic job with their e-commerce model which puts them ahead of many other competitors in their space. “

Digital sales for its Nike brand jumped 84% in its second fiscal quarter ending in November. The company also beat analysts’ expectations for sales and earnings.

“I think Nike is continuing higher,” Shay added. “I think it might pull back a bit further from where we are right now, but I think it’s a buy on that pullback, and I’m aiming for $150.”

A move to $150 is almost 7% off Friday’s close and would exceed its all-time high of $147.95.

Nike’s technical setup also supports the long-term bullish case, according to Craig Johnson, chief market technician at Piper Sandler.

“Stocks have been in this nice upside price channel for quite some time,” he said in the same interview. Noting the recent drop, he added: “It seems like a stock that should be bought at this pullback.”

“We continue to think there’s more room to run here for Nike. We have that name in our model portfolio and it’s one we continue to like very much here,” Johnson said.

Disclosure: Shay owns NKE.

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