Microsoft earns another Buy rating: Street Calls of the Week

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Here is your Pro Recap of the top takeaways from Wall Street analysts for the past week: upgrades for Nike, Zscaler, and Live Nation Entertainment; new buy ratings for Microsoft and First Solar.

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What happened? On Monday, Citi upgraded Nike Inc (NYSE:NKE) to Buy with a $135 price target

What’s the full story? Citi is increasingly optimistic regarding Nike’s ability to protect their earnings per share (EPS) in 2024 and 2025 despite a “choppy macroeconomic environment”, driven by their gross margin (GM) recovery, new innovation, and solid position in China. The analysts believe Nike’s GM recovery should start in the second quarter of F24 and continue through F25, thanks in part to lower freight costs, leaner inventory, lower promotions, and direct-to-consumer (DTC) mix benefit.

Citi wrote Nike will likely launch new products in calendar 2024 ahead of the Paris Olympics, and that it ought to maintain its strong presence in China despite the volatile macro situation. The analysts are expecting Nike to miss its revenue target and beat its GM target in the second quarter of F24. They further expect NKE to absorb a more conservative view on the second half of F24 sales, and to communicate its ability to hit its EPS targets with more visible GM gains and better sales, general, and administrative management.

Citi believes Nike is a one-of-a-kind brand with visible margin recovery, creating a favorable risk/reward in their view.

Buy at Citi means “Buy (1) ETR of 15% or more or 25% or more for High risk stocks.”

How did the stock react? Nike shares spiked from $115.72 to