Is Nike Set For An Earnings Beat?

In a report published Wednesday, DA Davidson analyst Andrew Burns maintained a Neutral rating on

, with a price target of $110. Nike is expected to report 4Q15 revenues of $7.684 billion and EPS of $0.85 as compared to the consensus estimates of $7.669 billion and $0.83, respectively. The company is also expected to report gross margins of 45.9 percent, up 31bps year over year, and operating margins of 13.2 percent, up 60bps year over year. "We are modeling Futures orders to be led by 19% growth in Greater China, 17% growth in Central & Eastern Europe, 12% in North America and Japan, 9% growth in Western Europe, and 3% in the Emerging Markets," analyst Andrew Burns mentioned. Nike's FY16 earnings growth is expected to be constrained by currency headwinds. "We expect the strength of NKE's global operations to be evident in F4Q results. The combination of a healthy athletic apparel and footwear market, DTC outgrowth, and strong basketball category performance should all benefit the company," Burns added. The company has been awarded an eight year merchandising and marketing partnership, with the NBA starting with the 2017-2018 season. Nike is expected to reiterate its FY16 guidance of mid-single digit revenue growth and high single to low double-digits earnings growth. In the report DA Davidson noted, "NKE deserves a premium valuation given its current business momentum; however, at current valuation levels we see insufficient upside to our price target to recommend the shares."