3 Takeaways From Nike's Q3

Nike Inc NKE's fiscal third-quarter earnings report on Thursday signals the company is picking up momentum, but the results fell short of convincing Cowen to turn bullish on the stock.

The Analyst

Cowen's John Kernan maintains a Market Perform rating on Nike's stock with an unchanged $68 price target.

The Thesis

Nike's earnings report shows the company has "more energy in its product cycle" across running, basketball and apparel and is seeing gross margin improvements, Kernan said in a Friday note.

Three factors prevent a bullish stance on the stock at this time, Kernan said. They are:

North American sales declined 6 percent, which represents the worst decline in more than seven years.
Nike guided its fiscal fourth-quarter sales to grow by a high single-digit, which fell short of the analyst's estimate of 10 percent and the consensus estimate of 8 percent.
Nike's sentiment could be driven by a potential inflection in North American sales trends in fiscal 2019, but the analyst is estimating sales to be flat in fiscal 2019 from the prior year.

Nike's international story is showing signs of being "robust," but the analyst said he's unable to justify boosting fiscal 2019 estimates or the stock's rating.