Nike's North American Concerns Are Getting Priced In

Nike Inc NKE has reported “choppy” 4Q results and futures.

Credit Suisse’s Christian Buss maintained an Outperform rating on the company, while lowering the price target from $68 to $63.

North American Concerns

Buss mentioned that Nike’s “with international strength overshadowed by a deceleration in North America futures to 6 percent, which highlights some market share and category challenges in the region.”

The futures were below the estimate, as well as meaningfully below the futures reported for the previous quarter.

Pressure

The analyst also pointed out that the concerns regarding the pressure on basketball ASP seem to have been well-founded, with the category growing on 2 percent in FY16, as compared to the total Nike brand growth of 13 percent.

Buss believes that the concerns regarding strength at Under Armour Inc UA and Adidas are likely to pressure growth expectations for Nike in FY17.

“This is the bad news that we had been expecting and we expect near-term pressure on shares as a result,” Buss stated, while adding that “investors are set to benefit from continued global revenue growth in the high-single digits, and margin expansion opportunities with mix shift to DTC and roll out of the category offense and integrated marketplace in Europe and China.”

The EPS estimates for FY17 and FY18 have been lowered.