Morgan Stanley: Decline In Nike A Chance To Accumulate Shares That Are 'Ultimately Headed Much Higher'

Jay Sole of Morgan Stanley commented in a note on Friday that Nike Inc's (NYSE: NKE) second quarter earnings per share not only grew by 25 percent, but suggests the company can deliver at least mid-teens growth throughout fiscal 2015.

“Nike's second quarter report underscored why we have high conviction in our Nike base case earnings per share estimates,” Sole wrote. “In a quarter where foreign exchange, emerging market macro, and geopolitics were significant headwinds, Nike still delivered 25 percent earnings per share growth based on robust top-line and gross margin improvement.”

Shares were reaffirmed with an Overweight rating and unchanged $105 price target.

Sole notes that Nike demonstrated “strong” results across almost every key category, channel and geography. The analyst adds that Nike's 11 percent futures growth suggests global market share gains should continue.

However, Sole suggests that shares of Nike may “lag” in the near-term as investors may have been expecting 100 to 200 basis points higher futures growth. The analyst does believe that this figure is “unrealistic” and that investors should consider any decline in stock price as a chance to accumulate shares that are “ultimately headed much higher.”