Nike Estimates Reduced, but Weakness Priced in - Citi

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By Sam Boughedda 

Ahead of Nike 's (NYSE:NKE) fiscal first quarter results, to be reported on Thursday, September 29, analysts at Citi and Deutsche Bank (ETR:DBKGn) provided previews, with both expecting macro pressures.

A Deutsche Bank analyst told investors in a note that the firm is lowering estimates ahead of the print.

Deutsche Bank, which has a Buy rating and $123 price target on the stock, anticipates Nike's fiscal first quarter EPS will miss consensus, primarily driven by soft results in China, FX headwinds, and greater than expected GPM contraction.

"We are now modeling revenues for China of $1.581B, below the Street's $1.666B estimate," wrote the analyst. "On the positive side, we expect revenues in North America to come in roughly in line with consensus and are modeling growth up 4.8% YOY vs. the Street up 4.0%, driven by our view that the company's DTC channel will post solid results as inventory flow likely improved from the prior quarter."

Meanwhile, a Citi analyst, who has a Neutral rating on the stock, lowered the firm's price target to $113 from $116. The analyst said the firm's "China survey suggests continued pressure in disposable income (not worse, not better) and higher promos overall vs Jun" while its North American survey "suggests NKE is in good standing with the consumer but the promos have ticked up, and disposable income remains pressured."

"We are reducing our 1Q23/F23E primarily to reflect a weaker outlook in N America and ongoing macro risks related to inflation and elevated inventories. We note that sentiment is skewed negative heading into the print, suggesting much of the weakness is priced in," wrote the analyst.