Apparel company Nike Inc NKE will report first-quarter financial results Tuesday on the heels of recently naming a new CEO. Shares could be volatile after the earnings report.
Earnings Estimates: Analysts expect the company to report first-quarter revenue of $11.64 billion, down from $12.94 billion in last year's first quarter, according to data from Benzinga Pro.
The company has missed revenue estimates from analysts in three of the last four quarters but beaten estimates in seven of the last 10 quarters overall.
Analysts expect the company to report first-quarter earnings per share of 52 cents, down from 94 cents in last year's first quarter. The company has beaten analyst estimates for earnings per share in four straight quarters and nine of the last 10 quarters overall.
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What Analysts Are Saying: With the announcement that Elliot Hill is returning to the company and will be the new CEO, analysts have been raising their price targets.
Jefferies analyst Randal Konik maintained a Hold rating and raised the price target for Nike from $80 to $85 ahead of the earnings report.
"We believe investor expectations for F1Q are fairly low, as foot/web traffic data has remained soft and competitors continue to gain share," Konik said.
The analyst said there's "not much to get excited about yet" for Nike, but the incoming CEO will change things.
Hill's impact may not be felt until fiscal 2026, the analyst cautioned.
"Therefore, NKE shares are in ‘no man's land' and likely remain range-bound for a number of quarters."
Hill re-joining Nike is a positive development, the analyst added, with the change potentially improving culture and the company's wholesale channel.
"However, we are wary of ongoing challenges he will face."
One of the biggest catalysts for Nike is coming with an analyst day in November. The analyst said the analyst day, the company's first in seven years, could be pushed out with the change.
In the earnings report, Nike is likely to talk about the new Air Max and could also highlight upcoming products, the analyst added.
"While Nike is beginning a new multi-year product innovation cycle in 2H24, we foresee headwinds as the company works to control its current product assortment and wholesale partnerships."
Stifel analyst Jim Duffy recently maintained a Hold rating with a $79 price target.
The analyst said bringing back a long-time Nike insider should be viewed as a positive.
“Recent underperformance is a direct result of losing focus on what has made Nike great for so many years,” Duffy said. “Under Mr. Hill’s leadership, we hope to see a revitalization of the Nike culture and a renaissance in innovation and design.”
The analyst warns that changing CEOs can reset financial forecasts, trigger periods of product revitalization and potentially lead to additional management changes.
Key Items to Watch: While all the talk about Nike will be on the incoming CEO, the company likely won't share much new information about this leadership change before the move happens in mid-October.
Instead, investors will likely focus on the top- and bottom-line numbers with recent quarters showing strength in earnings per share and weakness in revenue versus Street estimates.
One of the biggest focuses from investors and analysts outside of the new CEO will likely be on the regional results. The fourth-quarter results showed strength in China and weakness in North America.
NKE Price Action: Nike stock was down 1.16% to $88.40 at market close on Monday versus a 52-week trading range of $70.75 to $123.39. Nike stock is down 17% year-to-date in 2024.
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