Is it Time to Raise a White Flag on Nike Inc (NKE)? Canaccord Reigns in Expectations for Fiscal 2018

How long will investors still hold out patience for Nike after two years of a "stale innovation pipeline?"


Will the Street soon grow impatient and ditch Nike Inc (NYSE:NKE)? Keep in mind, this is a stock that in its heyday back in November two years prior was soaring at $67- and has since dipped below $53 in trading levels today. This marks a roughly 21% loss in value for the athletic retailer giant, from days of sales growth that was reaching 10% circa 2015- to a present-day wind down to just 4.4% for 2017.

Approaching Nike’s first fiscal quarter report for 2018, due next Tuesday, and an Analsyt Day set for the close of October, Canaccord analyst Camilo Lyon fears “patience is wearing thin and panic may be setting in” for disappointed Nike investors.

As such, the analyst reiterates a Hold rating on shares of NKE with a price target of $51, which represents a 3% downside from where the stock is currently trading. (To watch Lyon’s track record, click here)

“NKE investors have exhibited an extraordinary amount of patience over the past two years, and perhaps that patience could start to wane. […] In that time, the company has shown little in the way of progress as it relates to its stale innovation pipeline, while a resurging Adidas has taken meaningful share to the point of causing panic internally, according to our industry contacts. In fact, NKE this quarter has become more promotional, more of its footwear platforms have slowed, and NKE-levered retailers have been crippled by negative comps. As we head into the company’s FQ1 report on Tuesday, September 26 and then its Analyst Day event in late October, we remain cautious on the stock as we believe expectations for these events must be tempered, particularly the 2020 goal of hitting $50B in sales,” contends Lyon.

For fiscal 2018, the analyst has cut back on his expectations, taking his EPS forecast down from $2.34 to $2.32. Lyon believes Nike’s goal to hit $50 billion in revenue within three years is a lofty one, as when the target was set two years ago, Nike’s path seemed far more promising. However, there could be room for Nike to bring upside to “an optically low bar” for conservative fiscal quarter expectations.

Cautious optimism circles this retailer player, as TipRanks analytics exhibit NKE as a Buy. Out of 19 analysts polled by TipRanks in the last 3 months, 9 are bullish on Nike stock while 10 remain sidelined. With a return potential of 12%, the stock’s consensus target price stands at $60.00.