Sell-Side Overwhelmingly Bullish On Nike Despite Post-Earnings Pullback

Nike Inc NKE shares are down despite reporting a first-quarter beat that has the company on track to do roughly $40 billion in sales in 2019.

The Analysts Weigh In

Stifel analyst Jim Duffy said Nike’s first quarter was a strong start to the year that showcased acceleration in North America and balanced international strength.

The sportswear company reported earnings of 67 cents per share, beating estimates by 5 cents. Sales of $9.948 billion beat estimates by $18 million. 

Nike’s VaporMax, Air Max 270, React and ZoomX surpassed $2 billion in retail sales, Duffy said. 

Stifel maintained a Buy on Nike with a $96 price target.

“As Nike continues to evolve the business toward a faster, more innovative and consumer-centric model, we expect improved ROIC and a higher earnings multiple." 

Citi analyst Kate McShane said that while the stock has fallen since the Q1 print, Nike's quarter was clean quarter overall, with investor expectations running high into the report. 

Citi maintained a Buy on Nike. The stock's next catalyst should be second-quarter results, McShane said, adding that she sees an opportunity for gross margin upside in the second half of 2019 as Nike continues to drive higher full price sales and Nike Direct outperforms.

Wedbush analyst Christopher Svezia said Nike’s conservative Q2 guidance helped create a buying opportunity for a resurgent company that is solidly executing its strategy, seeing record consumer engagement and has an improved underlying outlook.

The analyst reiterated an Outperform rating with a $90 price target and said to accumulate shares on the pullback, as he projects Nike is still likely to see multiple expansion due to its sales momentum and gross margin expansion.

Macquarie Research analyst Laurent Vasilescu maintained an Outperform rating and raised the price target from $87 to $98.

Vasilescu forecast that 2019 EPS will exceed $2.83, representing 19-percent year-over-year growth, and said weakness in the stock after Tuesday's Q1 print is an "opportunity to believe in Nike." 

Barclays analyst Matthew McClintock said he remains bullish on Nike and sees meaningful revenue and margin growth upside in both the near- and long-term. 

Barclays increased its 2019 and 2020 EPS estimates to $2.75 and $3.20, respectively. The firm maintained an Overweight rating on Nike with a $100 price target. 

Price Action

Nike shares were down more than 1 percent at the time of publication Wednesday at $83.88. 

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Photo courtesy of Nike.