Nike Market Sentiment Is Lackluster Heading Into Q2 Print

Sentiment toward Nike Inc (NYSE: NKE) shares remains lackluster ahead of its second-quarter print on December 20, given concerns about market share erosion in North America.

Nike shares were down 7 percent since the first-quarter earnings report in September versus 5 percent rise in SPX.

Beaverton, Oregon-based Nike is facing mix shift toward lifestyle/retro, with weakness in basketball and second-half weighted guide. Nike guided sales up in "mid-single-digit range, at or below reported futures growth" (up 5 percent).

Analyst Commentary

Oppenheimer analyst Anna Andreeva said estimates look high and expects $0.41 in EPS versus Street view of $0.43.

“We think there's risk to F2Q17 sales; with estimates still needing to come down, in our view (at $2.54, we are low on the Street for FY18), multiple at 20x '18E still rich,” Andreeva wrote in a note.

The analyst said North America footwear (about one-third of total sales) is up against four-point tougher compare, driven by units, while ASP compares ease.

That said, Andreeva maintains her Perform rating on the stock as she looks for tangible evidence of innovation, which is key for Nike's longer-term algorithm of low-double-digits revenue and mid-teens EPS growth.

“Trading at 22x FY17E, NKE's multiple has compressed YTD albeit could still see pressure as sell-side estimates still heading lower (consensus down 5% since beginning of the year),” Andreeva added.

At last check, shares of Nike rose 1.94 percent to $52.54.