Deutsche Bank's Bullish Thesis On Nike

Deutsche Banks’s upside thesis for Nike is based on several growth levers, including the acceleration of the brand’s business in China (following a successful “reset” plan) and continued brand momentum in several important categories.

In the first quarter of fiscal 2016, analysts Dave Weiner and Sindhu Chitturi expect to see ASP increases continue “and strong Futures growth, as investors start to look towards the Oct. Investor Day.”

Related Link: Dan Nathan Sees Unusual Options Activity In Nike

The firm models earnings of $1.16 per share on revenue of $8.2 billion, up 3 percent year-over-year, for the period. In addition, it projects a 47.1 percent gross margin, up 50 basis points year-over-year, and a 15.7 percent operating margin, up 10 basis points.

Moreover, the experts assured they see upside to their forecasts. Based on their client conversations, they think “investors’ Futures expectations (cc) range from 9 percent - 11 percent (vs. +14 percent last year).”

What To Listen For During The Earnings Call

The report highlighted three issues to pay attention to in Thursday’s earnings call:

• 1) Continued momentum in China despite a weaker macro backdrop.
• 2) An update on Nike’s geographic “reset” of its operations in Brazil.
• 3) Commentary on the October 14 Investor Day.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.

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