Zinger Key Points
- Analysts expect Nike to report a 10.5% year-over-year revenue decline in Q1, with EPS projected at $0.51.
- Investors are wary of growth timelines due to mixed signals from China and potential guidance cuts below current consensus.
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Goldman Sachs analyst Brooke Roach reiterated the Buy rating on Nike, Inc. NKE with a price forecast of $105.
According to the analyst, the company’s first-quarter results, set to be released on October 1, are expected to be healthy, with attention focused on trends in China versus North America.
That said, investors are cautious about the pace and timeline for the brand’s return to growth due to mixed signals from the Chinese market and uncertainty surrounding franchise management actions, including the extent and duration of rebalancing in the lifestyle category, Roach writes. Consequently, the analyst adds that there will likely be a heightened emphasis on the innovation pipeline and scaling initiatives, along with forward-looking insights related to the second quarter and second half of the fiscal year.
Also Read: Nike Executive’s Return To Become Top Leader Continues ‘Boomerang CEO’ Trend At Major Companies
China continues to be a significant topic of debate, especially given the volatile macro trends and partner performance indicating weak demand in the region during the summer.
With overall consumption under pressure, Nike will be scrutinizing inventory levels and the dynamics of sell-in versus sell-through, as well as the trends in “online vs. offline” demand.
According to the analyst, investors anticipate the company will lower its guidance to a level below the current FactSet consensus.
As Nike re-evaluates its plans for an investor day, the analyst is looking for additional insight on when the new CEO will outline his initial priorities for the business.
For the upcoming quarter, the analyst anticipates a year-over-year revenue decline of 10.5% and earnings per share (EPS) of $0.51. For the fiscal year 2025, the analyst projects a revenue decrease of 5.0% year-over-year, with gross margin expansion of 31 basis points, and an EPS of $3.24.
Price Action: NKE shares are trading higher by 0.55% to $87.94 at last check Wednesday.
Image via Shutterstock
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