Tuesday's Market Minute: Nike (NKE) Earnings Preview

Nike NKE reports its first quarter for fiscal 2023 after the bell on Thursday. Zacks expects it to report earnings of $0.91/share and revenue of $12.27 billion. Several analysts cut their price targets ahead of the report, including Deutsche Bank trimming to $123 and Jefferies to $130 – but both maintained a buy rating and the stock is currently trading around $96.

Shares of the company have fallen over 30% year-to-date and hit a two-year low on Monday. As an international company, Nike is affected by the strong U.S. dollar. China’s lockdowns are also impacting Nike: Greater China revenues fell almost 20% last quarter, and factory closures are squeezing supply.

Despite this, Nike forecasts fiscal 2023 revenue rising in the low double-digits. It is also seeing strength in digital sales, which rose around 18% in fiscal 2022. Direct-to-consumer made up 42% of total sales in 2022 as well, showing strong brand loyalty from consumers and decreased reliance on retail partners – a boon for margins during lockdowns.

Even if Nike is a strong play for the long-term, as some analysts believe, will the market crush it short-term if its earnings disappoint?

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