Janney Still Neutral on Nike (NKE) Following Q4 Results; Lots to Love, Plenty of Constraints
Janney is maintaining a Neutral rating and $57 fair value estimate on Nike, Inc. (NYSE: NKE) following fourth-quarter results issued after markets closed Thursday.
Analyst Eric Tracy noted Nike's in-line EPS of 76 cents and futures orders of up 8 percent.
On North America ops, Tracy notes, "footwear had its lowest quarterly gain since 3Q11 (although footwear is +DD within the NA futures window), however apparel should continue to support the near term (combined with measured distribution expansion into specialty running, etc)."
Tracy thinks that China's channel issues are somewhat improving, "but local supply chain dislocations will continue to be a near-term drag, while macro uncertainty somewhat clouds planned back half stabilization." Pricing and lower materials costs could help gross margins widen further. Risks include "structural inflationary pressures (labor in particular) and currency likely dampen the strength of the turn. He believes that second-half fiscl 2014 demand creation into the 2014 World Cup should "further constrain EPS flow through."
There's a lot to like about Nike, Tracy contends: some might say the brand is "as strong as ever," there's long-term global growth opportunity, Nike has revolutionized manufacturing (Flyknit and 3-D printing), and the innovation pipeline is "robust."
Risks include input cost pressure, currency fluctuation, and geographic economic climates.
Tracy notes that shares are going for about 20 times FY14 EPS estimates and 18 times FY15 EPS estimates. That compares with a group average of 16 times and trailing five-year average of 17 times.
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 $62.32 yesterday, with a 52 week range of $50.59-$106.23.
Analyst Eric Tracy noted Nike's in-line EPS of 76 cents and futures orders of up 8 percent.
On North America ops, Tracy notes, "footwear had its lowest quarterly gain since 3Q11 (although footwear is +DD within the NA futures window), however apparel should continue to support the near term (combined with measured distribution expansion into specialty running, etc)."
Tracy thinks that China's channel issues are somewhat improving, "but local supply chain dislocations will continue to be a near-term drag, while macro uncertainty somewhat clouds planned back half stabilization." Pricing and lower materials costs could help gross margins widen further. Risks include "structural inflationary pressures (labor in particular) and currency likely dampen the strength of the turn. He believes that second-half fiscl 2014 demand creation into the 2014 World Cup should "further constrain EPS flow through."
There's a lot to like about Nike, Tracy contends: some might say the brand is "as strong as ever," there's long-term global growth opportunity, Nike has revolutionized manufacturing (Flyknit and 3-D printing), and the innovation pipeline is "robust."
Risks include input cost pressure, currency fluctuation, and geographic economic climates.
Tracy notes that shares are going for about 20 times FY14 EPS estimates and 18 times FY15 EPS estimates. That compares with a group average of 16 times and trailing five-year average of 17 times.
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 $62.32 yesterday, with a 52 week range of $50.59-$106.23.