Analysts See In-Line Q1 For Nike Inc; Currency Impact Questioned

Nike Inc (NYSE: NKE) posts fiscal first-quarter earnings Thursday while analysts eyeball a mixed bag in commodity costs and currency impacts.

Cotton prices are near record lows while rubber prices continue to decline, Macquarie's Laurent Vasilescu said in a note. Leather prices, on the other hand, are creeping up.

Vasilescu, who maintains an Outperform rating and $88 price target on the stock, said sportswear retailers in China are seeing improving results, which should help the Oregon-based apparel maker.

Greater China sales of $2.6 billion grew 5 percent in the year just ended, and were a relatively small and slow-growing component of Nike's $27.8 billion in total sales.

Nike's dividend yield is at a five-year low, and Vasilescue predicts the company will hike the quarterly payment in November to $0.29 cents a share, from $0.24, to bring the yield in line with the company's long-term average.

Morgan Stanley's Jay Sole, meanwhile, said recent declines in currency, including the Russian Ruble and the Brazilian Real, will hurt sales by 1.3 percent, compared with his earlier forecast of a 0.2 percent impact.

Worth noting, though, Sole rates the shares at Overweight with an $88 target. "The stock should continue to grind higher post earnings," he said in a note Monday.

US sales, which amounted to about $12.3 billion last year, grew "at a high single-digit rate" in the first quarter according to Sole, who remarked Nike gained market share in women's apparel from the likes of Under Armour Inc (NYSE: UA).

Sole expects Nike will meet first-quarter consensus and offer an outlook in line with expectations.

Likewise, Deutsche Bank's David Weiner sees an in-line first quarter with no surprises in the company's upcoming guidance, although he called recent currency exchange impacts "a wild card."

Weiner, who maintains a Buy rating and $90 target, said Nike's revenue growth is likely to slow in the current year, but the company can bolster its profit margin by shuffling products and sales channels.