Nike, Finish Line Have Big Reports Coming: Here's What Jefferies Expects

In a report published Monday, Jefferies analyst Edward Plank said that the sentiment in the athletic space "remains robust" ahead of the earnings reports by

and

. Analyst Edward Plank has a Buy rating on Nike and a price target of $120. "We believe a favorable product cycle continues to fuel demand for Nike. Future orders were strong coming out of 3Q (up 11%) and we expect a similar run rate going forward." Plank expects Nike to record 3 percent sales growth, since strength in the US dollar is likely to reduce 4Q revenue by 8-9 percentage points. The EPS is estimated at $0.83 for 4Q, factoring in around 20 bp of GM expansion and 20 bp of SG&A leverage, as the company "laps heavy demand creation spend last year for the World Cup." In the report Jefferies noted, "Given the robust backdrop within running and basketball, we would not be surprised if our estimate proved conservative even against current headwinds. We expect solid growth in both the footwear and apparel categories and across geographies, and think it's likely we begin to see upwards earnings revisions coming out of the quarter." Plank has a Buy rating on Finish Line and a price target of $29. "This has admittedly been a bumpy call for us, but with expectations reset and the bar low, we look for Finish Line to begin executing to its turnaround plan." Although products margins may be under pressure in 1H, on account of the rebalancing of the company's running portfolio, the outlook "is stabilizing" and improvements should be visible by the second half of this year. "Additionally, we believe FINL saw some success in newer running platforms in 1Q," Plank wrote. The EPS is estimated at $0.23 for 1Q. "With cost controls in place, we remain optimistic that the company can execute improvements to its core business while also aligning its smaller divisions for EBIT growth as we progress through FY16," the report added.