Benzinga - by Chris Katje, Benzinga Staff Writer.
Apparel and sportswear company Nike Inc (NYSE:NKE) will report second quarter financial results after market close Thursday.
Here's a look at the key earnings estimates, what analysts are saying and items for investors to watch.
Earnings Estimates: Nike is expected to report second quarter revenue of $13.427 billion, according to data from Benzinga Pro. The amount would come in ahead of the prior year's $13.315 billion total.
Nike has beaten revenue estimates from analysts in four of the last five quarters.
Analysts expect Nike to report earnings per share of 84 cents in the second quarter, which would be down from the prior year's 85 cents per share. Nike has beaten estimates for earnings per share from analysts in five of the last six quarters.
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What Analysts Are Saying: Nike's second quarter results could come against tough year-over-year comparisons, Raymond James analyst Rick Patel said.
Patel has an Outperform rating on Nike and raised the price target from $121 to $130 recently.
"We see growth improving in F2H as excess marketplace inventory improves, Nike benefits from better sell-in to Wholesale accounts, innovation accelerates, and y/y comparisons ease while margins also begin expanding," Patel said.
The analyst said channel checks for Nike showed promotional activity from the company, which could limit revenue upside.
Meanwhile, a strong risk/reward for Nike is recognized by RBC Capital Markets analyst Piral Dadhania.
The analyst, who has an Outperform rating, recently raised the price target from $120 to $127 on Nike.
Dadhania said the second quarter results could see revenue growth and gross margin expansion. The analyst thinks the risk/reward is more balanced than the prior quarters.
The analyst also anticipates growth in China, a factor that could be emphasized in the second quarter and potentially counterbalance challenges in the North American region.
Goldman Sachs analyst Brooke Roach said margin expansion and growth are improving for Nike.
The analyst initiated coverage on Nike with a Buy rating and a price target of $139.
"Cleaner inventories, moderating product cost inflation, tailwinds from freight/logistics, and improving inventory health represent clear margin expansion opportunities," Roach said.
The analyst points out that while there are worries about market share and pressures in the wholesale channel, these issues are becoming less significant.
"Additionally, we see room for stronger revenue growth ahead as the company cycles tough compares and reaccelerates its innovation and marketing engine into 2024."
Other recent analyst ratings for Nike include:
Telsey Advisory: Outperform rating, price target raised from $128 to $140
Citigroup: Upgrades rating from Neutral to Buy, price target raised from $100 to $135
Truist: Initiates coverage with Hold rating, price target $108
Key Items to Watch: The report from Nike could lead to commentary and questions from analysts about the strength of Black Friday, Cyber Monday and the overall holiday shopping season.
Analysts and investors will also want to hear how inventory levels stack up and how promotional the company has been during the holiday season.
International sales will be a key metric for the company, as previously mentioned, with China showing potential for positive growth and the ongoing weakness in the North America region remaining a focal point of discussion.
Sports could also become a topic of discussion with Nike involved with the 2024 Paris Olympics, several major soccer tournaments taking place in 2024 and a potential parting of ways from longtime endorsed athlete Tiger Woods.
NKE Price Action: Nike shares trade at $121.00 versus a 52-week trading range of $88.66 to $131.31. Shares of the footwear company are up 4% year-to-date in 2023, trailing the broader market.
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