Raymond James Remains Bullish On Nike's FY24 Margin Setup Despite Likely Mixed Q3

  • Raymond James analyst Rick B.Patel reiterated an Outperform rating on the shares of Nike, Inc. NKE with a price target of $130.
  • The analyst's F3Q23 estimates (raised modestly on FX) are conservatively below consensus.
  • Demand tailwinds include a strong start to Holiday selling, momentum in Direct, ongoing brand affinity, markdown-driven transactions, and green shoots in China.
  • The analyst's channel checks and read-throughs on NKE are mixed but lean positive. 
  • That said, the analyst noted that several Global Brands have given soft CY23 guidance on less sell-in at U.S. wholesale.
  • The analyst notes time spent on the Nike app decelerates but remains strong Y/Y. Sensor Tower data on the amount of time users spent in aggregate on the Nike mobile app increased +34% y/y in F3Q. 
  • While this is a deceleration from +48% in F2Q, it still indicates strong growth in engagement, in the analyst's view. 
  • The analyst considers Kohl's Corporation's KSS negative 4Q read-through and Macy's Inc's M note of softness in soft home, active, and casual as a negative read on Nike.
  • Caleres, Inc. CAL robust demand for key athletic brands and Dick's Sporting Goods Inc's DKS favorable athletic trends are considered a positive read on Nike.
  • Despite his expectations for a mixed F3Q, the analyst remains bullish on NKE and sees strong gross margin recapture (~350 basis points) from improving freight and inventory conditions.
  • Price Action: NKE shares are trading lower by 0.68% at $119.83 on the last check Friday.
  • Photo Via Company
Market News and Data brought to you by Benzinga APIs
Price Target
Posted In: Analyst ColorNewsPrice TargetReiterationSmall CapAnalyst RatingsGeneralBriefsConsumer DiscretionaryDepartment StoresExpert Ideas
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!