What Analysts Are Saying About Nike After Earnings

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Nike Inc. (NYSE: NKE) reported its most recent quarterly financial results after the markets closed on Tuesday. Unlike FedEx, Nike beat its earnings expectations, but the stock actually went down despite being a strong beat. Ultimately it wasn’t a bad report, and the problem lies not so much with Nike but its competition from Under Armour and Adidas.

24/7 Wall St. has included some of the main highlights from the earnings report, as well as what analysts are saying after the fact.

The athleisure giant said that it had $0.68 in earnings per share (EPS) and $8.4 billion in revenue, versus consensus estimates from Thomson Reuters of $0.53 in EPS and revenue of $8.47 billion. The fiscal third-quarter of last year reportedly had EPS of $0.55 and $8.03 billion in revenue.

Revenues for the Nike brand were up 7% to $7.9 billion on a currency-neutral basis, driven by double-digit growth in Western Europe, Greater China and emerging markets, as well as the sportswear and Jordan brand categories. Revenues for Converse were up 3% to $498 million, driven by growth in North America.

During this quarter, the company repurchased $475 million worth of shares as part of its four-year, $12 billion program approved in November 2015. Approximately $8.4 billion remains under the current repurchase plan.

On the books, Nike’s cash and short-term investments totaled $6.2 billion, an increase of $1.1 billion compared with the prior year, as growth in net income and proceeds from the issuance of debt in the second quarter of fiscal 2017, as well as proceeds from employee exercises of stock options, more than offset share repurchases, higher dividends and investments in infrastructure.

A few analysts weighed in on Nike:

  • Wedbush Securities maintained its Neutral rating and $52 target.
  • Jefferies maintained its Buy rating and $74 target, calling the gains by Adidas at a peak; the firm is positive on Nike’s current product cycle.
  • Merrill Lynch maintained its Underperform rating on Nike, noting that Vapormax could miss high expectations and with revenues expected to remain pressured.
  • Citigroup raised its price target to $66 from $60.
  • Deutsche Bank cut the price target to $64 from $66.
  • FBR lowered its price target to $53 from $55.
  • Susquehanna has a positive rating and raised the price target to $65 from $64.

Shares of Nike were trading down 6.2% at $54.40 on Wednesday, with a consensus analyst price target of $62.47 and a 52-week trading range of $49.01 to $63.45.