In a research report released earlier today, Piper Jaffray analyst Erinn Murphy shared her expectations on Nike Inc (NYSE:NKE), as the company is scheduled to report its earnings for the first quarter of fiscal 2016 on Thursday, September 24th. The analyst reiterated an Overweight rating on NKE, with a price target of $120, which represents a slight upside potential from current levels.
Murphy noted, “In terms of estimates, we stand at $1.18 versus the Street’s $1.19 in EPS and at $8.149B in sales (vs. $8.211B consensus). We are published at a 750 bps FX sales headwind for Q1 and note emerging market currencies have continued to weaken. With broader macro concerns in China and with some emerging concerns from the Street on sustainability of domestic growth, we believe investors are looking for the overall futures to be up LDD ex-FX (with comparable growth in NA and mid to high-teens in China). On balance, we believe there is modest upside to our Q1 EPS estimate but expect it to stem from more margin vs. sales upside. Our GM estimate stands at 50 bps growth in line with guidance. During FY15, Nike expanded GM 120 bps.”
The analyst concluded: “We continue to favor NKE’s story longer-term against the backdrop of a strong athletic cycle. While we believe there is upside to our Q1 $1.18 EPS estimate, we note that FX headwinds have stiffened and we are more mindful of the 12% sales exposure that NKE has to China. We believe strength in women’s apparel, in Europe and at DTC has remained strong. Net-net, we view this quarter as more of a non-event.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Erinn Murphy has a total average return of 0.6% and a 44.8% success rate. Murphy has a 11.3% average return when recommending NKE, and is ranked #1933 out of 3766 analysts.
Out of the 23 analysts polled by TipRanks, 17 rate Nike stock a Buy, while 6 rate the stock a Hold. With a return potential of 3%, the stock’s consensus target price stands at $119.11.