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5 Predictions Ahead Of Nike's Investor Day

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  • Nike Inc (NYSE: NKE) shares are up 29 percent year-to-date, breaching the $120 mark for the first time this year on September 25.
  • Citi’s Kate McShane maintained a Buy rating for the company and a price target of $142.
  • Although Nike’s shares have jumped 7 percent since the Q1 results and 28 percent YTD, McShane believes that the company’s investor day could prove to be a catalyst.

Nike’s upcoming investor day would be the first meeting since 2013, and the first with new CFO Andy Campion. Analyst Kate McShane expects the company to focus on its digital and supply chain during the meeting.

McShane enumerated the top 5 predictions for the Investor Day:

  1. Updated 5-year Revenue Targets: The analyst expects Nike to announce its annual revenue growth guidance in the range of +11 percent through FY19. This would bring in $46 billion in revenues, with digital being an accelerator, brand expansion to new categories, international growth and further growth in the women’s section.
  2. Update on Supply Chain: McShane believes that Nike has the ability to continue to achieve stronger expansion in annual GPM, backed by its ongoing efficiency improvement, with possibly higher COGS benefits in the long term.
  3. Digital Strategy: Nike may increase its focus on e-commerce and international growth, versus local retail growth. It may also focus on leveraging customer data from its successful Nike and NTC apps.
  4. New Details on China: “Following a successful repositioning, we expect a continued focus on category offense; NKE could also provide an update on Brazil,” the Citi report stated.
  5. Increased Returns to Shareholders: McShane expects Nike to outline updated cash priorities, with otentially more aggressive buybacks and dividends than previously witnessed.

“We would expect an acceleration in top line guide to DD (vs previous HSD) and meaningful improvement to gross margin guidance given Nike mgt’s recent commentary that they are just starting to see costs of production becoming less of an offset to gross margins, which should drive higher-than-traditional EPS guidance of mid-teens growth,” McShane stated.

Latest Ratings for NKE

DateFirmActionFromTo
Jan 2017CLSAInitiates Coverage OnUnderperform
Jan 2017Atlantic EquitiesInitiates Coverage OnOverweight
Dec 2016Cowen & Co.DowngradesOutperformMarket Perform

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Posted-In: Citi Kate McShane VetrAnalyst Color Reiteration Analyst Ratings

 

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