Janney Montgomery Scott Downgrades Nike (NKE) to Neutral Following Q2 Results

December 21, 2012 6:58 AM EST Send to a Friend
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Price: $94.45 -2.71%

Rating Summary:
    22 Buy, 9 Hold, 0 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 14 | Down: 25 | New: 49
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Janney Montgomery Scott downgraded Nike (NYSE: NKE) from Buy to Neutral with a price target of $110.00 (up from $104) following Q2 results.

"Following a decent 2Q print, and with shares up nearly +15% since bottoming post-1Q (using after-hours bid of $103.60; vs. +2% for the S&P), we believe risk/reward is now more balanced in NKE; as such, we are moving our rating to Neutral from Buy.

To be clear, there are many fundamental factors to remain positively biased in the name: 1) an innovation pipeline that continues to support strong trends in perceived "mature" markets such as North America (2Q revs +17%, futures +14%), 2) gross margins that appear to finally be inflecting positively, 3) LT growth opportunities in China/Emerging Markets, and 4) a pristine cash position that will be used to support shareholder-friendly moves. That said, we believe NKE may be in a bit of transition period, where top line trends could moderate against difficult compares (+7% co. currency global futures, with window that appears to be very front end loaded), particularly as price increases are more fully lapped beginning Spring '13 and new revolutionary product platforms (Flyknit in particular) take time to ramp.

The firm raised FY13/FY14 EPS estimates to $5.35/$6.08 (from $5.23/$5.96).

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 $99.00 yesterday.


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