Canaccord analyst Camilo Lyon is advising a caution light when it comes to investing in shares of Nike Inc (NYSE:NKE) after the athletic retailer giant’s fiscal second quarter results may have brought an earnings beat to the table, but are not detracting from the larger problem at hand: wilting future sales.

In reaction, the analyst remains on the sidelines, reiterating a Hold rating with a price target of $51, which implies a 2% downside from where the shares last closed.

Nike’s fiscal second quarter yielded EPS of 50c, topping both consensus expectations of 42c as well as Lyon’s projection of 43c. Yet, the analyst’s two cents on the matter reveal all that glitters is not gold, as he explains, “The earnings quality was low as the beat was largely driven by a sharp reduction in S&GA (+9c to EPS) vs. the initial guide of L-MSD expense growth.”

Additionally, though 6.4% in revenue growth outclassed the analyst’s estimate calling for 5%, taking into account weaker gross margins of -134 bps compared to his projection of -105bps, Lyon speculates promotions played a factor in sales delta.

Moreover, Lyon sums it up bluntly, underscoring, “Sharp SG&A reductions can’t mask weakening futures,” with global futures of +2% (cc) underperforming his forecast of 2.7% and significantly came up short of the Street’s 5.2% estimate.

The analyst notes, “Most concerning within futures was NA futures -4% vs. our flat estimate (consensus +1.2%), likely a result of the competitive landscape shifting toward Adidas and to a lesser extent UA.”

Ultimately, “We view wholesale performance as a key barometer of consumer demand, and the growing disparity between w/s and DTC is not a good outcome as it raises the risk of excess inventory at NKE retail. Given the decelerating futures and stiffening FX headwinds, we are hard pressed to see how NKE will meet full-year reported revenue guidance of +HSD, which implies a sharp DD Q4 acceleration against intensifying competition, while also comparing against Olympics-boosted growth last year,” Lyon contends.

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, one-star analyst Camilo Lyon is ranked #3,678 out of 4,291 analysts. Lyon has a 46% success rate and faces a loss of 1.8% in his yearly returns. When suggesting NKE, Lyon earns 0.0% in average profits on the stock.

TipRanks analytics demonstrate NKE as a Buy. Based on 28 analysts polled by TipRanks in the last 3 months, 17 rate a Buy on NKE stock, 10 maintain a Hold, while 1 issues a Sell. The 12-month average price target stands at $62.04, marking a 20% upside from where the stock is currently trading.