Sportswear maker Nike Inc. (NKE) lost its fight to prevent an E.U. investigation into its Dutch tax affairs, which started in 2019, according to Reuters. (See Nike stock charts on TipRanks)
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The case included five tax rulings issued against Nike by Dutch authorities between 2006 and 2015.
As per the ruling, the royalty payments made by Nike European Operations Netherlands and Converse Netherlands for the use of intellectual property were higher than would have been normally charged, thereby lowering their taxable base and gaining illegal state aid.
In its defense, Nike had argued that the E.U. competition enforcer had directly started a formal investigation without showing proper proof of the existence of the Dutch state aid.
However, Nike lost the fight as the E.U. case was backed by Europe’s second-highest court, which said, “The (European) Commission complied with the procedural rules, and neither failed to fulfill its obligation to state reasons nor made manifest errors of assessment.”
Yesterday, Jefferies analyst Randal Konik reiterated a Buy rating on the stock with a price target of $200, implying 23.8% upside potential to current levels.
Konik said, “Global athletic demand is accelerating, pricing power is high, inventory levels at wholesale are lean, and Nike’s market share is growing. The company’s direct strategy is scaling, which should drive margins higher and accelerate cash flows.”
The stock commands a Strong Buy consensus rating based on 22 Buys, 2 Holds, and 1 Sell. The average Nike price target of $183.83 implies 13.8% upside potential to current levels. Shares have gained 64% over the past year.
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