>For most of the last four and a half years **Nike's** average analyst target has sat above the share price, often by 20% or more. The stock went from $134 to $36.
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>I did not think the analysts were lying, so I went through it month by month to see what happened. 27 month-ends with at least five analysts behind the average. The target was 10% or more above the price in 22 of them. In none of those 22 did the price get there within a year. A year later the price was lower in 24 of the 27. Promised on average +21%, delivered on average -17%.
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>(Targets and analyst counts from Nasdaq's analyst data, prices from a daily price table, both read 17 September; the arithmetic is mine.)
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>Here is what I think a target is, after doing that. It is a twelve-month price forecast that gets re-based every time the price moves. When Nike fell, the targets were cut, and they landed about a quarter above the new price again. A number that follows the price down cannot also be the number that warns you the price is going to fall. That is not a flaw in the analysts. It is the instrument.
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>What I read instead is a valuation on filed numbers, which asks a different question: what is this business worth today on the earnings it has actually reported? In March 2022 the last annual report Nike had filed, eight months earlier, showed $3.56 of earnings per share. At its own ten-year median multiple, 28.6x, that is roughly $102. The price was $134. So the price already contained a lot of growth that had not been filed yet. That did not say sell. It said wait, and "wait" would have looked wrong for a full year, because a year later the shares were still $123.
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>On the valuation page I read, the price against Nike's own historical fair-value line ran away from it in 2021 and has spent five years coming back to it. The filed EPS by year tells the same story: $3.56 in 2021, $2.10 in 2026.
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>Nike may or may not be cheap now; that is not the point here. Targets are not useless either: they tell you what everyone else already expects, which is worth knowing precisely because it is already in the price. The point is that the two numbers answer different questions, and it took me this table to see which one I had been reading.
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>Disclosure: I run a research site; I am not naming or linking it, and the site publishes no target of its own. I have no position in Nike.
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>Which one do you look at first, the target or the multiple on filed earnings?