Credit Suisse On Nike: Momentum Persists Despite Currency Headwinds

Christian Buss of Credit Suisse commented in a note on Friday that

continued to demonstrate strong demand trends across regions in its second quarter results. “We continue to see opportunity for Nike to sustain low-double digit revenue growth, 40 to 50 basis points of operating margin expansion annually, and mid-teens or better earnings growth,” Buss wrote. The analyst adds that Nike is one of the strongest large-cap investment opportunities within the consumer apparel segment. Buss notes that Nike's brand revenue rose 18 percent under a constant currency, while Converse sales rose 24 percent under a constant currency. The analyst adds that this solidifies Nike's “lifestyle positioning” which is offsetting demand volatility across emerging markets that remain challenged. Buss does state that he will continue to carefully monitor Nike's inventory levels given that control of markdowns and inventory is crucial to the analyst's thesis of consistent margin expansion throughout fiscal 2015 and in to fiscal 2016. The analyst adjusted his full year fiscal 2015 estimates and now expects the company to earn $3.61 per share, lower than a previous $3.64 estimated. On the other hand, revenue was guided higher to $30.9494 billion from $30.8766 billion. Shares were maintained with an Outperform rating and $105 price target.