Nike (NKE) 2Q Likely to Show Growth Inflection on 12/18 - Stifel

Stifel analyst Jim Duffy reiterated a Buy rating and $164.00 price target on Nike (NYSE: NKE) ahead of FY2Q earnings on December 18th. On the FY1Q earnings report, management stated that rationalizing inventory imbalances was the number one priority for FY2Q. These inventory imbalances were most pronounced in Greater China (+44% y/y in FY2Q) and EMEA (+30% y/y) but the promotion on Singles’ Day (11/11) in China was seen as strategic to bringing Greater China inventories inline by quarter end.

The analyst is expecting a better than expected report stating "We expect a solid FY2Q featuring inflection to reported growth, continued digital strength, and inventory normalization. Capacity for upside to consensus estimates, however, may be more weighted to FY3Q/FY4Q and the out years.
Our focus will be on digital/app growth, Greater China growth (and associated Singles’ Day performance), and the rightsizing of quarter end inventories (+MSD y/y or lower with sequential improvement led by China). We see it possible FY21 revenue guidance is slightly more optimistic to +LDD vs. +HSD/LDD prior outlook. Relative to consensus, our higher EPS view for FY21, FY22, and FY23 reflects both revenue strength and higher gross margin. The 12 mos. TP of $164 reflects a 35X multiple on our $4.69 FY23 EPS estimate".

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 $139.39 yesterday.

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