Courtesy of Benzinga.
Nike Inc (NYSE: NKE) investors’ patience for a turnaround may be starting to wane.
“Patience is wearing thin and panic may be setting in,” said Canaccord Genuity analyst Camilo Lyon as he lowered fiscal year 2018 estimates from $2.34 to $2.32.
Since 2015’s all-time highs, shares are down 20 percent and have done very little in the past two years, despite new marketwide highs.
During that time, Nike has shown little promise in pipeline innovation, beyond the VaporMax release, which is one of the few areas doing well for the company.
Meanwhile, adidas (AG) (ADR) (OTC: ADDYY) has taken off in the last two years, with shares tripling as it continues to steal market share away from Nike and in turn cause panic amid Nike investors and the company internally.
During Nike’s fall from grace, discounting products has been widespread, crippling retail partners with weak comps. Demand for some of Nike’s biggest shoe platforms — Jordan, Roshe and signature basketball — have all deteriorated. It will be difficult to overcome the stigma that significant discounting does to a brand.
Heading into Nike’s first-quarter earnings, Lyon echoed the sentiment that expectations will need to be tempered, especially regarding the company’s ambitious target of $50 billion in revenue by 2020. This target was announced in 2015 when things were looking much different for Nike.
“Historically Q1 is NKE’s strongest quarterly beat, and given how seemingly conservative this Q1 sounds (flat sales and GM down 150-180bps), NKE should surprise to the upside due to an optically low bar,” said Lyon.
Lyon expects that the futures and global futures will deteriorate further and expects the discounting to persist into 2018. Canaccord Genuity maintains a Hold rating on Nike with a $51 price target.
Related Link: Finish Line Downgraded Ahead Of Earnings
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Latest Ratings for NKE
Date | Firm | Action | From | To |
---|---|---|---|---|
Sep 2017 | Bernstein | Initiates Coverage On | Outperform | |
Aug 2017 | Morgan Stanley | Maintains | Overweight | |
Aug 2017 | Jefferies | Downgrades | Buy | Hold |
View More Analyst Ratings for NKE
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