tiprankstipranks
Last Minute Thought: Buy or Sell Nike Stock Before Earnings?
Stock Analysis & Ideas

Last Minute Thought: Buy or Sell Nike Stock Before Earnings?

After the market action comes to a close today, Nike (NKE) will take its turn to deliver its latest financial report. While undoubtedly one of the stock market’s giants, the swish machine has in no way been immune to the bearish market developments. The shares have underperformed the broader markets this year and currently sit 42% into the red on a year-to-date basis.

Will the FQ1 (August quarter) report be able to tip the scales back in Nike’s favor? That remains to be seen, although Baird’s Jonathan Komp thinks that due to concerns around gross margins, China headwinds, and “global economic uncertainty,” the market is braced for Nike to miss FQ1 consensus EPS of $0.93.

On that front, Komp is more upbeat, predicting EPS of $0.99. Additionally, based on expectations for “healthy growth” ex-currency across North America, EMEA and Latin America, the analyst’s forecast for revenue to hit $12.67 billion is also above consensus at $12.26 billion.

With Nike’s digital business increasingly prominent, a look at website traffic gives credence to Komp’s elevated expectations. In the quarter, Unique Visitors (UVs) climbed by ~30% sequentially, and by an even more impressive 60% from the same period a year ago.

That said, Komp thinks the outlook could potentially disappoint. Based on “currency and possibly other macro-related headwinds,” Komp is readying for some “negative F2023E EPS revisions.”

Nevertheless, looking further down the line, the analyst thinks the shares’ lackluster performance presents an opportunity for those taking the long-term view.

“While the fundamental outlook remains somewhat cloudy, we believe sentiment has shifted overly negatively relative to NKE’s strong brand fundamentals, favorable DTC-led model, and in our view solid multi-year earnings potential,” Komp summed up. “Following a -41% year-to-date stock decline, we see an improving risk/reward especially post the FQ1 report.”

Ahead of the print, Komp maintains an Outperform (i.e., Buy) rating along with a $127 price target. The implication for investors? Upside of 32% from current levels. (To watch Komp’s track record, click here)

Most analysts are with Komp here; the ratings break down as 12 to 6 in favor of Buys vs. Holds, resulting in a Moderate Buy consensus rating. At $125.35, the average price target implies shares will appreciate by 30% in the year ahead. (See Nike stock forecast on TipRanks)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

Trending

Name
Price
Price Change
S&P 500
Dow Jones
Nasdaq 100
Bitcoin

Popular Articles