Market Overview

'Panic' May Be Setting In Among Nike Investors

Share:
'Panic' May Be Setting In Among Nike Investors
Related NKE
Cowen: Puma's Q4 Strength Bodes Well For Nike, Adidas Earnings
Under Armour Posts Q4 Earnings Beat, But Analysts Unconvinced
Nasdaq Leads Reversal Lower, Russell 2000 Up; 4 Growth Stocks Form New Bases (Investor's Business Daily)

Nike Inc (NYSE: NKE) investors’ patience for a turnaround may be starting to wane.

“Patience is wearing thin and panic may be setting in,” said Canaccord Genuity analyst Camilo Lyon as he lowered fiscal year 2018 estimates from $2.34 to $2.32.

Since 2015's all-time highs, shares are down 20 percent and have done very little in the past two years, despite new marketwide highs.

During that time, Nike has shown little promise in pipeline innovation, beyond the VaporMax release, which is one of the few areas doing well for the company.

Meanwhile, adidas (AG) (ADR) (OTC: ADDYY) has taken off in the last two years, with shares tripling as it continues to steal market share away from Nike and in turn cause panic amid Nike investors and the company internally.

During Nike’s fall from grace, discounting products has been widespread, crippling retail partners with weak comps. Demand for some of Nike’s biggest shoe platforms — Jordan, Roshe and signature basketball — have all deteriorated. It will be difficult to overcome the stigma that significant discounting does to a brand.

tipranks_360.png

Heading into Nike’s first-quarter earnings, Lyon echoed the sentiment that expectations will need to be tempered, especially regarding the company’s ambitious target of $50 billion in revenue by 2020. This target was announced in 2015 when things were looking much different for Nike.

“Historically Q1 is NKE's strongest quarterly beat, and given how seemingly conservative this Q1 sounds (flat sales and GM down 150-180bps), NKE should surprise to the upside due to an optically low bar,” said Lyon.

Lyon expects that the futures and global futures will deteriorate further and expects the discounting to persist into 2018. Canaccord Genuity maintains a Hold rating on Nike with a $51 price target.

Related Link: Finish Line Downgraded Ahead Of Earnings 

_____
Image Credit: image used with permission

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 News Guidance Previews Reiteration Sports Analyst Ratings Best of Benzinga

 

Related Articles (NKE + ADDYY)

View Comments and Join the Discussion!

The Latest On Equifax: Things Aren't Getting Any Better

Papa John's And Sonic: 2 Appetizing Stocks For Value-Hungry Investors