Nike's US Business 'Disturbing': One Analyst Remains Cautious Despite Earnings Beat, Stock Run

Nike Inc NKE may be surging after a fourth-quarter earnings beat, but its performance in North America is a cause for concern.

“The continued decline of Nike’s U.S. business is disturbing. Outside the U.S. there is much greater parity between Adidas and Nike,” Matt Powell of NPD Group told Benzinga.

“To my eye, Nike is on sale now more than ever. Our industry was built on aspiration and inspiration, not on price,” added Powell.

Powell isn't the only one weighing in on the sportswear company post-earnings. Take a look below for a sell-side analyst roundup.

UBS

UBS believes that consensus EPS revisions will likely turn positive over the near term, raising its price target from $62 to $64 and staying at a Buy.

Nike’s direct-to-consumer focus and new partnership with Amazon.com, Inc. AMZN appears to be well received by the investor community.

“While Nike’s much-anticipated launch with AMZN was described as a small pilot, our sense is that product sold on AMZN is more likely to overlap with department stores/family footwear chains than with Foot Locker, Inc. FL and Finish Line Inc FINL,” said Michael Binetti of UBS.

Jefferies

Jefferies was confident that Nike is gaining more speed, more newness and more closeness with the supply chain, the product and the consumer following the fourth-quarter release.

With the athletic footwear cycle remaining strong, Jefferies analyst Randal Konik believes that Nike remains a long-term core holding.

Although futures were down 10 percent in North America, Konik noted that futures are becoming increasingly less correlated to sales as the company pushes further into the direct to consumer business, which currently makes up 35 percent of Nike’s business on a wholesale equivalent basis.

Jefferies reiterates a Buy on Nike with a $75 price target.

Cowen

While Nike beat consensus EPS estimates for the 20th consecutive quarter, by leveraging SG&A expenses and benefitted from a lower tax rate, Cowen analyst John Kernan continues to prefer Outperform rated adidas AG (ADR) ADDYY due to its higher growth and margin prospects through 2020.

Cowen raised its price target on Nike from $53 to $54 and maintains a Market Perform rating.

Deutsche Bank

Although it anticipates that fiscal year 2018 will be a challenging year for Nike as it implements its new Consumer Direct Offense strategy, Deutsche Bank raised its price target on the company to $69 from $63.

With Nike’s long-term growth prospects intact, Deustche Bank analyst Paul Trussell indicates that he is incrementally positive on Nike and reiterated a Buy rating on the company.

“While NKE is transitioning from less productive businesses to focus on the higher-margin ‘direct’ business, driving slight contraction in 1H North America revenue, the region is still forecast to grow in FY18,” said Trussell.

Nike shares closed Friday's regular trading session up 10.96 percent at $59.

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