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What Could The Catalyst For Nike Be This Fiscal Year?

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What Could The Catalyst For Nike Be This Fiscal Year?
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With Nike Inc (NYSE: NKE) set to release its fourth-quarter earnings Thursday, analysts are looking ahead to see if the sportswear giant can reverse the negative sentiment currently surrounding the company.

A Few Potential Catalysts, But No Clear Ringer

With the company putting a greater emphasis on its direct-to-consumer business, which delivers better margins and a recent partnership with Amazon.com, Inc. (NYSE: AMZN) — said to have already taken $1 billion away from other retailers — Deutsche Bank maintains its long-term bullish stance on Nike.

Deutsche Bank analyst Christian Buss believes that in fiscal year 2018 Nike will benefit from new product innovations, particularly from its Air Vapormax line, which could compete and possibly outperform adidas AG(ADR) (OTC: ADDYY) Boost technology that has really taken off.

At a time when athletic endorsements aren’t driving value the way they used to, an increase in endorsements outside of athletics may prove to be beneficial for the company.

Nike’s NBA apparel license also goes into effect in the second half of the year, and with Under Armour Inc (NYSE: UAA) losing a lot of steam, competition seems to be set squarely on Adidas following Nike’s “reset.”

Issues, Risks Remain

Notable issues still persist. however. While category demand is starting to show signs of slowing, classic styles are starting to lose momentum, although Adidas is successfully offsetting the decline with its solid new product lineup.

Buss believes risk–reward appears favorable for the long-term Nike investor, but the key catalyst Nike needs right now still remains unclear. The firm is lowering FY 2018 revenues and EPS estimates from $37.4 billion and $2.64 to $36.7 billion and $2.51, respectively.

Deutsche Bank has reiterated an Outperform rating on Nike but lowered its price target to $63 from $67.

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Latest Ratings for NKE

DateFirmActionFromTo
Jan 2019Cowen & Co.UpgradesMarket PerformOutperform
Jan 2019NeedhamUpgradesHoldBuy
Jan 2019HSBCUpgradesHoldBuy

View More Analyst Ratings for NKE
View the Latest Analyst Ratings

Posted-In: Analyst Color Earnings Long Ideas News Guidance Price Target Previews Reiteration Best of Benzinga

 

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