Nike Inc. (NYSE: NKE) closed out last week with a bang, after the apparel giant reported its fiscal fourth-quarter earnings. Management believes that Nike is poised for a big year, but there seem to be mixed feelings in the analyst community. Some analysts are coming to defend the Swoosh while others think apparel trends might be hurting Nike.

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

The company posted $0.60 in earnings per share (EPS) and $8.68 billion in revenue. That compares to consensus estimates from Thomson Reuters that called for $0.50 in EPS and revenue of $8.63 billion. In the same period of last year, Nike posted EPS of $0.49 and $8.24 billion in revenue.

In terms of the revenue breakdown, the Nike Brand revenue was up 7% at $8.1 billion and the Converse Brand revenues were up 10% at $554 million. The business segments within the Nike brand reported:

• Footwear revenues totaled $5.47 billion, up 8% from last year.
• Apparel revenues were $2.30 billion, an increase of 3%.
• Equipment revenues were $335 million, a decrease of 14%.

Wedbush has a Neutral rating with a $52 price target, implying a slight downside of 2% from Thursday’s closing price of $53.17. The firm is arguing that it will take Nike an extended period to reap the benefits from key initiatives and improve the underlying business. Wedbush detailed in its report:

Guidance also suggests that both fiscal first quarter and fiscal 2018 Street estimates should fall 20% and 5%, respectively. Shares traded up 8% after-hours, likely due to investor expectations substantially below the Street due to the restructuring announcement 2 weeks ago and strong qualitative commentary around key initiatives and products to drive growth. The fourth quarter beat, driven in part by a lower than expected tax rate and cost efficiencies that may not be sustainable given the first half 2018 outlook was notably below consensus expectations. We look for a better inflection in the fundamentals (qualitative and quantitative) and would not chase shares at current levels.

Jefferies reiterated a Buy rating with a $75 price target, implying upside of 41%. The firm believes that Nike is being smart, getting more speed, more newness and more closeness with the supply chain, the product and the consumer.

Merrill Lynch rated Nike as an Underperform rating with a mere $42 price target, implying downside of 21%. The brokerage firm said:

We expect sales and earnings growth to decelerate on market share pressures and intensifying competition. We see downside to Nike’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.

Oppenheimer has a Perform rating for Nike with no price target. The firm said in its report:

Nike is pulling back on less differentiated wholesale relationships (estimate as much as $500 million in lost sales in the fiscal first half of 2018), with fiscal 2018 product introductions scaling this year’s innovations (VaporMax/ZoomX); direct Amazon relationship in pilot stage allows control of product segmentation/customer interaction. Longer term, it appears Nike is making the right steps cleaning up distribution/focusing on own DTC, albeit in near term, estimates are coming down (fiscal first-quarter estimates shaping up $0.20 lower than consensus), with North America staying under pressure (fiscal 2018 guided as a hockey-stick recovery year). Staying sidelined; with inventories in North America cleaner (down 6% ending May), there could be some relief in promotional landscape in athletic.

Credit Suisse maintained its Outperform rating with a price target of $63, implying upside of 18.5%. The brokerage firm detailed:

Nike gave its strongest signal yet that it is seeking to disintermediate traditional wholesale channels as the next phase of its growth. The “triple-double” introduced the theme last quarter with the company targeting a doubling of DTC revenue, doubling of speed-to-market, and double the cadence of innovation. Guidance and company commentary this quarter provided details on the implementation, including what looks to be an aggressive curtailment of distribution into low-quality wholesale doors in developed markets. In addition, the company emphasized it expects substantial margin accretion from this DTC shift (constant currency gross margin expansion above the 30-50 basis points year over year long-term target in fiscal 2018), one of the few big question marks about this shift. With the innovation pipeline more robust than at any time in the last two years, and inventory levels finally under control, the company does look to be playing offense rather than defense again. We do expect topline growth to remain more moderate, and target a 5-7% long-term revenue growth trajectory, normalized margin expansion of 20-50 basis points year over year, and EPS growth in the low-double digits as the most likely outcome. That leaves Nike as one of the few high-ROIC large cap-consumer-discretionary growth businesses in our universe.

Shares of Nike were last seen trading up about 9% at $59.00 on Friday. The stock has a 52-week range of $49.01 to $60.33 and a consensus analyst price target of $60.59.

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