What to Expect When Nike Reports After the Close

Nike Inc. (NYSE: NKE) is scheduled to release the fiscal second-quarter earnings report after the markets close on Thursday. The consensus estimates call for $0.46 in earnings per share (EPS) and $9.17 billion. In the same period of last year, the sportswear maker said it had $0.46 in EPS and $8.55 billion in revenue.

For the prior quarter, revenues for the Nike Brand totaled $9.4 billion, up 10% on a currency-neutral basis, driven by double-digit growth internationally, and in Nike Direct, strong momentum in North America, and growth in almost every category led by Sportswear. Revenues for Converse were $527 million, up 7% on a currency-neutral basis, mainly driven by growth in Europe and Asia.

Following that release, Merrill Lynch was fairly unimpressed with the results. The brokerage firm reiterated an Underperform rating for Nike but raised its price objective to $55 from $50. Keep in mind this is the most bearish firm on Nike. It gave its investment rationale as follows:

We rate Nike shares Underperform. We expect sales and earnings growth to decelerate on market share pressures and intensifying competition. We see downside to NKE’s current P/E multiple given market share pressure in the U.S. and difficult International comparisons, which offset strong direct-to-consumer momentum and strength in China.

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

• Canaccord Genuity has a Buy rating and a $95 price target.
• Morgan Stanley has a Buy rating with a $103 price target.
• Macquarie has a Buy rating with a $98 target price.
• Jefferies has a Neutral rating with an $80 price target.
• JPMorgan has a Neutral rating with an $85 price target.
• Wells Fargo has a Neutral rating and an $82 price target.
• Robert Baird has a Buy rating with a $94 price target.

Excluding Thursday’s move, Nike had outperformed the broad markets, with its stock up 6% in the past 52 weeks. However, in just the past six months the stock was actually down 8%.

Shares of Nike were last seen up about 1% at $69.50, in a 52-week range of $60.13 to $86.04. The consensus analyst price target is $87.24.

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