Raymond James Remains Bullish On Nike's FY24 Margin Setup Despite Likely Mixed Q3

Raymond James analyst Rick B.Patel reiterated an Outperform rating on the shares of Nike, Inc. NKE with a price target of $130.
The analyst's F3Q23 estimates (raised modestly on FX) are conservatively below consensus.
Demand tailwinds include a strong start to Holiday selling, momentum in Direct, ongoing brand affinity, markdown-driven transactions, and green shoots in China.
The analyst's channel checks and read-throughs on NKE are mixed but lean positive.
That said, the analyst noted that several Global Brands have given soft CY23 guidance on less sell-in at U.S. wholesale.
The analyst notes time spent on the Nike app decelerates but remains strong Y/Y. Sensor Tower data on the amount of time users spent in aggregate on the Nike mobile app increased +34% y/y in F3Q.
While this is a deceleration from +48% in F2Q, it still indicates strong growth in engagement, in the analyst's view.
The analyst considers Kohl's Corporation's KSS negative 4Q read-through and Macy's Inc's M note of softness in soft home, active, and casual as a negative read on Nike.
Caleres, Inc. CAL robust demand for key athletic brands and Dick's Sporting Goods Inc's DKS favorable athletic trends are considered a positive read on Nike.
Despite his expectations for a mixed F3Q, the analyst remains bullish on NKE and sees strong gross margin recapture (~350 basis points) from improving freight and inventory conditions.
Price Action: NKE shares are trading lower by 0.68% at $119.83 on the last check Friday.
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