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Nike Inc. (NKE) — which carries CFRA's highest investment recommendation of 5-stars, or Strong Buy — is the world's largest seller of athletic footwear and apparel. More people now more than ever want to live healthier lives. 40% of Americans participate at least once a week in a high-calorie burning activity, and in China over 400 million people are active at least once a week, according to Nike.

Nike has triumphantly capitalized on the growing popularity of sports and active lifestyles, rolling out unprecedented innovations and variety at unparalleled speeds. This was underscored in Nike's most recent fiscal results (Q2 2021) with earnings per share surprising by over 25%.

Nike also posted a meaningful top-line beat, with positive direct-to-consumer performance (up 30%, highest currency-neutral growth rate since Q2 2015) in all geographies, led by digital (up 80% and exceeding 30% of sales mix, which is three years ahead of schedule) and China (up 19%; FY 21 to mark seventh consecutive year of double-digit growth on a currency-neutral basis).

Nike went on to raise fiscal year sales and gross margin guidance, as well. These exceptionally strong results reiterate our view that Nike, like the Greek Goddess that bears its name, is the emblem of strength, speed, and victory.

We are forecasting EPS growth of 85% in FY 21 and 26% in FY 22 versus Investor Day guidance for mid-teens growth on average. We see sales rising 15% in FY 21 and 13% in FY 22 versus an on average guide for high-single digit revenue growth.

Catalysts we see driving shares to new highs include:

1. Resumption of sports (e.g., Olympics, European Championships, NBA Finals).
2. Consumer Direct Offense (margin accretive direct sales, led by digital).
3. Organizational revamp to reflect a simpler consumer construct (men's, women's, and children's) that should better align resources to accelerate key growth opportunities.

Our 12-month target is $170, a P/E of 41.9x our FY 22 estimate of $4.06. This is expensive relative to peers, but warranted as we also do not really see retailers of Nike's size and scale growing at the same pace.

We note that Nike has a long track record of increasing returns to shareholders, including 19 consecutive years of increasing dividend payouts (+12% in FY 21, yielding 0.8%). When it comes to Nike, investors should 'Just Buy It.'