Analysts remain bullish on Nike’s direct-to-consumer strategy and brand momentum, even after the sports apparel giant’s disappointing earnings results. Nike shares slid 3% in the premarket. The company missed earnings expectations for the first time in three years because of lower margins. However, Nike did exceed revenue forecasts. In its fiscal fourth quarter , Nike reported per-share earnings of 66 cents, which was lower than the 67 cents anticipated by analysts polled by Refinitiv. Still, its revenue of $12.83 billion topped expectations for $12.59 billion. NKE 1D mountain Nike shares 1-day Despite the miss, Goldman Sachs’ Kate McShane maintained her buy rating on the stock, and actually raised her 12-month price target, saying she walked away from the results with her “constructive view intact.” Her $145 price target implies 27% upside from Thursday’s close. “While near-term growth and margins are more challenged than our expectations on wholesale shipment timing / liquidation sales / transitory cost headwinds / SG & A investments, we believe this quarter continued to deliver several key proofpoints of the bull case,” McShane wrote Thursday. This bull case includes Nike’s “robust” direct-to-consumer strategy, improving inventory, working past some transitory costs and its continued innovation in key segments including running shoes. JPMorgan’s Matthew Boss also kept his overweight rating. He cited Nike’s better-than-expected revenue, improving inventories, as well as no change to the brand’s momentum in its direct-to-consumer strategy. “Importantly, inventories exited 4Q23 Flat Y/Y, below 3Q +16% and below revenue growth +5% ( & forward mid-single digit guide) for the first time in 6 quarters with CFO Friend citing ‘a healthy marketplace’ setting the foundation for ‘sustainable, profitable growth’ in FY24 & beyond – consistent with our 6/28 4Q Preview fieldwork,” Boss wrote. Boss lowered his price target to $142 from $146. That new target represents 25% upside from Thursday’s close. On the other hand, Bank of America’s Lorraine Hutchinson maintained a neutral rating on Nike, and trimmed her price objective, saying the stock is dealing with a more challenging macro environment. “[We] think valuation fairly reflects the prospect of an improving margin outlook balanced by an uncertain demand environment in North America,” Hutchinson said to clients in a Friday note. “We are lowering our F24E EPS by $0.09 to $3.71 to reflect softer sales expectations and longer GM recovery outlook; we trim our PO to $125, now based on 34x F24E P/E (35.5x prev) to reflect the more challenged macro backdrop.” Her $125 price target, lowered from $135, is just 10% above Tuesday’s closing price. —CNBC’s Michael Bloom contributed to this report.
