Nike Earnings Preview: Wedbush Expects Strong Q1, Accelerating Momentum

Nike Inc (NYSE: NKE) is set to report fiscal first-quarter earnings after the market close Sept. 25.

The Analyst

Wedbush analyst Christopher Svezia reiterated an Outperform on Nike and upped the price target from $85 to $90, suggesting 12-percent upside.

The Thesis

In Q1, Nike may have continued to build on several of its successful platforms such as React, Air Max 270 and Zoom, while also gaining within its core franchises such as NBA, AF1, Air Max and Nike apparel, Svezia said in a Monday note. (See his track record here.) 

The apparel company benefited immensely from the French winning the FIFA World Cup, as it boosted its double-digit, currency-neutral growth in the EMEA region, the analyst said. 

Tailwinds such as the regional/channel mix, strong full-price sales and a favorable comparison positively influenced gross margin and more than offset higher product costs and forex volatility, Svezia said. 

Wedbush projects potential outperformance in North America, China and Western Europe and has an upward bias for Nike's outlook. 

Consequently, the analyst expects an upward bias for the outlook.

Wedbush raised its Q1 sales growth estimate from 8.2 percent to 9.4 percent, to $9.9 billion, and expects EPS of 63 cents, a penny ahead of the consensus. The sell-side firm expects high-single digit sales growth and 50 basis points or more in gross margin expansion. 

The Price Action

Nike shares have sprinted roughly 30 percent year-to-date. The stock was trading up 2.24 percent to $82.10 at the time of publication Monday. 

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Photo courtesy of Nike.