Goldman Sees Strong Q1 Results from Nike (NKE)

In a recent report from Goldman Sachs GS, Nike NKE is expected to post a strong Q1 based on a combination of accelerating sales trends, continued strong gross margins, and strong futures growth. Goldman sees some moderation in futures after the World Cup, but still expects strong growth this quarter driven by broader inventory rebuilding at retail following strong spring sell-through. Importantly, from a stock perspective, Goldman believes the setup is also very favorable as, typical of NKE's history as 4Q10 set a low bar coming into 1Q11. Nike historically beats Q4 by a much slimmer margin and issues conservative guidance. Though it pressures the stock, it creates a positive set up for the following quarter. Over the past decade, Q1 has been Nike's best quarter from an EPS beat/stock reaction perspective. Key risks involve a weakening of demand trends in calendar 2011 as well as sharp dollar strengthening. Goldman Sachs has a Buy rating on NKE with a 6 month price target of $85. Nike closed Friday at $73.75