FBR Capital Cuts Price Target on Nike (NKE) Following 1Q Report

September 28, 2016 8:10 AM EDT
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Price: $51.97 +1.80%

Rating Summary:
    27 Buy, 12 Hold, 0 Sell

Rating Trend: Up Up

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FBR Capital maintained a Market Perform rating on Nike (NYSE: NKE), and cut the price target to $55.00 (from $63.00), following the company's 1Q earnings report. NKE reported EPS of $0.73, ahead of the consensus estimate of $0.58. Results were driven by a one-time tax benefit. GM was below expectations, driven by FX headwinds, an expense shift, the impact of exiting the Golf equipment business, and off-price/clearance sales, partially offset by higher ASPs.

Analyst Susan Anderson commented, "NIKE reported F1Q17 EPS of $0.73, vs. FBR/consensus of $0.57/$0.58, reflecting a one-time tax benefit (~13 cents), incremental share repurchases (~1 cent), and better-than-expected revenue growth and operating overhead expense. Management reiterated FY EPS guidance of +LT growth, which now includes the 1Q tax benefit and allows for NA weakness and margin contraction. Futures were reported below expectations with currency-neutral September to January global futures of +7% (vs. consensus of +8.3%). NA futures of +1% were well below consensus of +4.4%. Management noted that the correlation between futures orders and revenue growth has declined due to an evolving business mix. As a result, futures will no longer be reported in EPS press releases; however, they will be referenced in the guidance and reported in the quarterly SEC filings. We like Nike's innovation pipeline, int'l runway, and LT margin catalysts, but we remain on the sidelines and look for improved NA and margin execution, and lower inventory growth. We maintain our Market Perform rating and lower our PT to $55 from $63."

For an analyst ratings summary and ratings history on Nike click here. For more ratings news on Nike click here.

Shares of Nike closed at $55.34 yesterday.

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