Consumer Products

What to Expect When Nike Reports Thursday

Currently, Nike Inc. (NYSE: NKE) is the second-best performing Dow Jones industrial average stock in 2018, and it is also the only Dow stock reporting earnings this week. Fiscal fourth-quarter and full-year earnings are coming on Thursday after the markets close. The anticipation seems to be building ahead of this report, as one key analyst already has come out with a glowing recommendation for the stock.

Looking ahead to the call, the consensus estimates for the fiscal fourth quarter $0.64 in earnings per share and $9.41 billion in revenue. In the same period of last year, Nike posted EPS of $0.60 and $8.68 billion in revenue.

Wedbush has issued an Outperform rating ahead of the report for Nike. The firm also has raised its price target of $82 from $75, implying an upside of 10.6% from the current price level. Wedbush expects to see EPS of $0.68 and sales of $9.4 billion for the fourth quarter as well, edging out the consensus on the bottom line.

The firm noted in its report that, in North America, this year Nike began to see real progress on several fronts, from inventory management, product and engagement that should translate into +L-MSD growth in fiscal 2019. Outside the United States, while growth remains strong, Nike is likely taking share in Europe while sustaining double-digit growth in China.

According to the brokerage firm:

On the margin, Nike is poised to return to G/M expansion for the first time in eight consecutive quarters as FX pressure, DTC and ASP turn to a more meaningful tailwind. Finally, SG&A growth will likely be slightly above levels articulated during its analyst meeting (slight leverage), which is warranted given the inflection in NA and key global events (World Cup). In all, Nike’s multiple accelerates as sales momentum builds and G/M rates are expanding, which in our view are key factors in fiscal 2019.

A few other analysts weighed in on Nike ahead of the report as well:

  • Goldman Sachs has a Neutral rating with a $78 price target.
  • Buckingham Research has a Neutral rating and an $80 target.
  • Robert Baird has an Outperform rating and an $82 price target.
  • UBS has a Neutral rating with a $78 price target.
  • Stifel has a Buy rating with an $87 price target.
  • Barclays has a Buy rating with an $80 price target.

Shares of Nike were last seen down about 1% at $72.50, with a consensus analyst price target of $74.53 and a 52-week range of $50.35 to $75.91.

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