Nike Ahead Of Investor Day: Is This The Bottom You've Been Waiting For?

By many measures shares of Nike Inc NKE have been a disappointment for investors throughout 2017, but this could change after the company hosts an investor day presentation Wednesday. Komp maintains an Outperform rating on Nike's stock with an unchanged $65 price target.

The state of the North American marketplace.

Direct-to-consumer plans.

Timeline on being able to scale "growth accelerators."

Potential for new materials and platforms such as Flyleather. Related Links: Just Not Doing It: Look For Nike Shares To Trade Range Bound Ahead Of Investor Day Analysts Say This Could Be A Potential Game Changer For Nike

Wednesday's presentation appears to be a direct opposite of the prior investor day back in October 2015, Baird's Jonathan Komp said in a research report. Two years ago, Nike appears to have all the momentum in the world based on a 25-percent earnings per share growth, 20-percent, plus, growth in global futures and a P/E ratio close to 30x, all at a time when its competitors were struggling.

Today, Nike's near-term visibility is "murky." Sentiment is poor based on the stock's current low-20x P/E multiple, the analyst said. But sentiment could start to improve after Wednesday's presentation; management is expected to clarify and/or moderate some of its expectations for future growth.

Nike's management could detail a "credible path" toward:

1. A consolidated revenue growth profile in the mid-to-high single-digits (versus prior expectations for 10 percent growth at the mid-point).
2. A double-digits EPS growth.
3. Healthy gross margin expansion.
4. Total shareholder return in the low- to mid-teens.

The analyst is also expecting management to discuss:

Bottom line, Nike appears to be taking the necessary steps to improve its performance moving forward, despite the mostly negative sentiment surrounding the stock, Komp said. But with a downside potential in Nike's stock to the high $40s and upside to mid $60s, the risk to reward profile is favorable for investors.