Goldman Previews Nike's Earnings (NKE)

Goldman Sachs is out with a research note on Nike NKE and has a Buy rating and a $95 price target on shares.

In a note to clients, Goldman writes, "We expect several factors to yield another strong quarter for NKE. (1) Strong Global product/innovation cycle – In the past two quarters, NKE orders were double digit against increasingly tough World Cup compares. Last week, both Adidas and FL posted strong results with positive reads for NKE. Specifically, FL comp sales grew high-single digits throughout 2H10 (best comps since 2001) and inventory grew for the first time since 2007, suggesting healthy order trends. Adidas guided to mid-/high-single-digit sales growth for calendar 2011, suggesting limited slowing despite lapping the World Cup, consistent with our outlook for NKE. (2) Focus on performance and style productivity is driving major recovery in NKE's US apparel which was +22% last quarter, and NPD data shows high teens sales growth for NKE's apparel at retail from November-January. (3) NKE is more insulated than most from inflation given brand/pricing power, limited cotton exposure, and diversified sourcing w/ only 36% from China. The biggest challenge is that there is little controversy surrounding the fundamentals; while this does not preclude stock performance over time, it somewhat lessens the “upside juice” from a good quarter."

Shares of NKE lost 96 cents yesterday to close at $88.96, a loss of 1.07%.