Nike Outlook Cheers Wall Street; Shares Gaining

Most analysts Friday applauded the outlook for Nike NKE, which earlier offered guidance and a fourth-quarter upside earnings beat.

Nike posted earnings of $0.78 per share on revenue of $7.4 billion after the bell Thursday, beating estimates by $0.03.

Perhaps the upside surprise wasn't so surprising: Nike has beaten the Wall Street consensus in seven of the past eight quarters.

A rare bear, Credit Suisse's Christian Buss cut his earnings forecast from $3.43 per share to $3.36. Buss maintained a Neutral rating on the shares with a target of $80.

Nike's inventory is increasing at the fastest rate in two years, although Buss said its level remains "reasonable." Given the connection between growing inventory and gross margin pressure, "we will continue to monitor inventory growth," Buss said.

Morgan Stanley Jay Sole said Nike "remains our top idea." Sole is Overweight on the shares, with estimates and price targets "under review."

"The stock may wobble a bit if Street estimates drop slightly," said Sole. "But we sense a large number of buyers ready to buy dips," thus limiting downside risk.

"Bears expect Nike to re-invest gross margin results" into sales, general and administrative spending, Sole said. But Sole added that those investments mean "higher top-line growth in the future."

Also maintaining a Buy on Nike is Deutsche Bank's David Weiner.

"Management left little doubt that momentum is continuing into the new fiscal year," said Weiner, whose price target is $85 to $90 per share.

Further product innovation will power price increases and Weiner said Nike's future earnings may again be higher than its managers forecast.

Citi's Kate McShane said although Nike's guidance implies lower growth, "we still think we could see upside" to the company's forecast.

McShane, maintaining a Buy rating, cited continued improvements in supply chain as well as market share gains and pricing power.

Nike was up 1.8 percent to $78.26 recently.