Nike stock is headed for new highs this year, thanks in part to its push into the metaverse, according to a Wall Street analyst.
Guggenheim’s Robert Drbul dubbed the athletic-apparel retailer his “best idea” for 2022 in a December 31 note, saying Nike “is rapidly embarking on the next era of its company history,” which he expects to be “digitally led.”
“The brand commands dominant market share, which we expect will grow materially from here as digital scales further, new product innovation remains robust, and heavy investment behind key growth drivers continues,” he wrote.
Drbul maintained a buy rating and a price target of $195 on Nike stock, which was down 1.8% Monday after gaining 18% in 2021.
He said the company is “the leader in the athletic apparel industry,” and raised his earnings per share estimates for 2023 to $4.85 from $4.50 and for 2024 to $5.70 from $5.27.
Drbul said he’s closely watching Nike’s evolving digital strategy and its engagement in the metaverse, a digital world where people interact. “What would any outlook for 2022 be without mention of the Metaverse?” he said.
Insider reported previously that Nike has been pushing into the future internet, called both Web 3.0 and the metaverse. Its push has included video games, the creation of a metaverse studio, and even a promised line of digital sneakers called CryptoKicks.
In December, the Beaverton, Oregon-based company announced its acquisition of influential digital sneaker-maker RTFKT, which had previously received a $33 million valuation in a funding round led by Andreessen Horowitz.
The metaverse shot into the mainstream in 2021 when the company formerly known as Facebook rebranded to Meta. The concept has struggled to land on a single definition, and prominent people, such as Tesla’s Elon Musk, have snubbed the idea altogether.
Even so, many see non-fungible tokens, aka NFTs, as the key to unlocking this digital world where avatars of individuals can shop, play video games, build worlds, buy land, and more.