Nike's Sales Miss: Always Darkest Just Before The Dawn

Nike Inc's NKE disappointing earnings report isn't reason enough for Michael Binetti of UBS to throw in the towel.

Binetti maintained a Buy rating on Nike's stock with a price target lowered to $63 from $67, although he did acknowledge a "sobering outlook" in the near term. Specifically, the analyst believes Nike's initial fiscal 2018 commentary indicates a flat to negative earnings per share outlook and foreign exchange woes will cost $1.6 billion to $2.0 billion in cumulative EBIT.

The Positives

Despite the near-term outlook, Binetti is bullish on Nike's prospects over the longer term as it's always "darker before the dawn."

The bullish sentiment stems from Nike's post-earnings conference call in which management confirmed the "increased urgency" to boost the pace and impact of innovation, including more details than usual on new product lines.

Binetti highlighted Nike's commentary on four new cushioning systems, a personalization push and supply chain speed. The analyst also suggested it will become increasingly apparent that Nike's futures and revenue will remain less correlated as new products are rolled out with a lead-time of less than three months.

Finally, Binetti pointed out that Nike still has $8.4 billion remaining under its share buyback authorization.

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