Since reporting Q1 earnings last week, Nike Inc NKE shares are up 4.6 percent. Baird analyst Jonathan Komp is among those impressed by Nike’s quarter.
8 Things
In a new report, Komp outlined his take on eight important Nike topics following earnings:
- Consensus fiscal 2017 earnings forecasts, which have fallen to $2.40, are in line with Baird’s outlook.
- Global futures at FQ4-end of +11 percent were not significantly front- or back-weighted, a positive sign of stability.
- Management seems satisfied with +6 percent North American futures.
- Nike seems to be tightening its Always Available business.
- DTC strength reflects strong demand balance between brick and mortar sales and online sales.
- Nike’s innovation pipeline is encouraging.
- Moderation in Western European futures reflect Euro Championship timing and Brexit-related impacts are already reflected in the company’s guidance.
- North American inventory clearing was the driver behind a 0.26 percent decline in gross margins, and margins are expected to rebound by 0.3–0.5 percent in fiscal 2017.
“We believe NKE is well-positioned to drive constant-currency EPS increases of 15+ percent and revenue growth in the high single- to low double-digits, while generating attractive returns on capital and free cash flow,” Komp added.
Baird maintains an Outperform rating and a $67 price target for Nike.
Disclosure: The author holds no position in the stocks mentioned.
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