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by SignalFactory   ·  June 25, 2020 | 08:34:58 UTC  


by SignalFactory   ·  June 25, 2020 | 08:34:58 UTC  

*Nike (NYSE: NKE) is scheduled to announce Q4 earnings results on Thursday, June 25th, after market close.

*The consensus EPS Estimate is $0.04 (-93.5% Y/Y) and the consensus Revenue Estimate is $7.29B (-28.4% Y/Y).

*Over the last 2 years, NKE has beaten EPS estimates 88% of the time and has beaten revenue estimates 100% of the time.

*Over the last 3 months, EPS estimates have seen 5 upward revisions and 16 downward. Revenue estimates have seen 4 upward revisions and 19 downward.

Nike stock hasn’t seen as big a boost from the coronavirus pandemic as some of its peers, but investors are hoping a big fiscal fourth quarter will be enough to help the athletic-product retailer’s shares play some catch-up. It is scheduled to report fourth-quarter earnings after the close on Thursday.

Nike shares are down about 2.5% year to date, which is better than the S&P 500 and many other retailers. But it is nowhere near the white-hot growth of other health-focused consumer names, including Lululemon Athletica (LULU) and Peloton (PTON). That said, analysts have been racing to raise their price targets in advance of the report.

That isn’t to say it will be all smooth sailing. Analysts have warned that, like many other retailers, Nike faced headwinds from the pandemic, that could show up in the quarter.

Many argue that the benefits, especially long term, outweigh the risks. Bulls have been quick to point out that the company’s products fit well with consumers’ renewed focus on health and wellness, as well as shoppers’ willingness to spend money, despite economic uncertainty and high unemployment.

Nike is positioned well because, even before the pandemic struck, it had been investing heavily in online sales and ramping up efforts to reach consumers directly, rather than leaning on retail partners.

The company reported a better-than-expected fiscal third quarter, and many argue that it will be an overall retail winner when the worst of the pandemic passes.

Analysts are expecting the company to report earnings of a nickel a share in the fourth quarter, on revenue of $7.29 billion. More than 80% of analysts rate the stock Buy or the equivalent. There are no bearish calls on the Street.

Notably, the company retained its positive earnings track record, with earnings and sales beat in third-quarter fiscal 2020. The NIKE Direct business displayed strength backed by more than 30% digital revenue growth across all geographies and Converse.

Nevertheless, the effects of store closures in China due to the outbreak hurt Greater China’s revenues in third-quarter fiscal 2020. This resulted in a lower sales mix in Greater China, which is its high margin geography, causing gross margin decline in the quarter. Further, the company expects soft results in the fiscal fourth quarter due to store closures. 

Nike LONG (Buy)

ENTER AT: 102.28

T.P_1: 104.73

T.P_2: 109.93

T.P_3: 117.74

S.L: 93.89

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