Here's Why It Could Be A Big Year For Nike

Nike Inc NKE stock traded higher Friday following a quarterly earnings and revenue beat.

Several Wall Street analysts have commented on Nike’s quarter. Here’s a sampling of what they had to say.

Voices From The Street

Stifel analyst Jim Duffy said inflection in Nike’s North American sales and margins make fiscal 2019 look like a big year for Nike. “New product initiatives and the strategies for more direct consumer engagement are compelling and we expect these investments generate strong long-run return,” Duffy wrote.

B. Riley FBR analyst Susan Anderson said Nike’s Consumer Direct Offense is performing well up to this point. “Through 2X direct NKE is moving closer to the consumer through differentiated Retail concepts, leading with mobile Apps, dotcom and digital partners,” Anderson wrote.

Cowen analyst John Kernan said nothing in Nike’s report changed Cowen’s 2019 earnings estimates. “Given $3.9B in average annual free cash flow (FY18E-FY22E) and a four-year EPS CAGR of mid-teens, NKE could return $21B+ to shareholders over the next four years through share repurchases and dividends, which has potential to increase to $1.20+ from $0.70 in FY17 in five years,” Kernan wrote.

Credit Suisse analyst Michael Binetti said Nike appears well-positioned to reverse two years of market share losses. “With the key sentiment driver (N. America) starting to accelerate (US wholesale back to ‘pull-market]), & upside to +50bp GM guide (300bp pressure from FX/markdowns reversing)—Nike is better positioned to beat forward guidance from here,” Binetti wrote.

Ratings And Targets

Despite the strong quarter, analysts remain mixed on Nike’s upside after yet another quarter of negative North American revenue growth. Here’s a rundown of updated ratings and price targets:

• Stifel has a Buy rating and $80 target.
• B. Riley has a Neutral rating and $68 target.
• Cowen has a Market Perform rating and $68 target.
• Credit Suisse has an Outperform rating and $78 target.

At time of publication, Nike's stock traded up 2.6 percent at $66.17.

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