Key points:
- Numerous analysts lower price target on Nike ahead of Q3, citing challenges in China
- Stifel believe that western DTC strength can offset lagging Chinese demand
- Deutsche Bank forsee changing sentiment in China that will bolster growth in the long-term
It’s all eyes on Nike (NYSE: NKE) next week as the company is poised to announce its Q3 earnings. Its been a whirlwind of emotion for retailers and manufacturers, each suffering from inflation and supply chain issues in their own way.
Macro concerns are weighing on investor sentiment, threatening even the most steadfast, globally-embedded brands; like Nike. Ahead of the anticipated earnings, there have been numerous analyst changes that offer insight into the approaching financials of the world-renowned fashion brand.
Stifel analyst Jim Duffy lowered the firm’s price target to $160 down from $202, maintaining a firm Buy rating ahead of company earnings. There is little analysis of Nike’s fiscal growth without the intermittent mention of China. Although Duffy noted the potential shortfall from Chinese market challenges, he argues that DTC digital strength and margin upside opportunity in Western countries should offset any potential risk. The stark truth is that the Chinese challenges are more or less already priced into Nike’s current share price.
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On a similar page, Deutsche Bank analyst Gabriella Carbone lowered the firm’s price target to $173 from $199 whilst holding its Buy rating. Carbone has a strong belief in the long-term benefit of the Chinese market; in that, although sentiment is moving slowly, the top-line trajectory should be more visible after a couple of quarters. Baird analyst Jonathan Komp believes that due to embedded macro concerns, sentiment is already priced into the shares at their current levels; Komp keeps an Outperform rating and $192 price target.
