Analysts from Piper Jaffray and Canaccord weighed in on Nike Inc (NYSE:NKE) and CalAmp Corp. (NASDAQ:CAMP) following earnings releases. Both are bullish, citing better than expected EPS and international growth for Nike, and success and growth due to a partnership and announced acquisition for CalAmp.
Analyst Erinn Murphy of Piper Jaffray weighed in on Nike yesterday following its Q2/2016 earnings report. The analyst was optimistic, citing higher than expected EPS, although sales fell short of her expectations. However, despite this miss, Murphy points out that “shares lifted in the aftermarket tied to an exceedingly strong orderbook.”
The analyst also cites an increase in constant currency futures. Specifically, the company displayed the strongest futures growth in Greater China with 34% y/y growth. In addition, the analyst noted, “China, Japan, Western Europe and the Emerging Markets all saw accelerating futures in Q2 vs. Q1’s clip.” Nike’s North American futures displayed 14% y/y growth, with overall e-commerce growing at 50% y/y as the company expanded its e-commerce initiatives in countries such as Canada, Switzerland and Norway. Next quarter, Nike plans to launch e-commerce initiatives in Chile, Mexico, and Turkey. Murphy also commented on the company’s inventory levels, stating, “Despite working through domestic levels of inventory, mgmt. maintained its FY16 guidance which calls for 50 bps gain in gross margin.”
Murphy reiterated her Overweight rating on the company with a price target of $140. Of the 20 analysts who have rated Nike in the last 3 months, 18 are bullish while 2 remain on the sidelines. The average 12-month price target for the stock is $140.33, marking a 6% upside from where shares last closed.
Analyst Michael Walkley of Canaccord Genuity weighed in in telecommunication services company CalAmp yesterday after its Q3/2016 earnings release. The analyst expressed bullish sentiments, citing that its Q3 revenues and pro-forma EPS surpassed his expectations, as did Q4 guidance. Walkley is hopeful about the company’s Wireless DataCom business, stating that it is “well positioned to drive strong F2016 and F2017 sales and earnings growth driven by ramping sales to Caterpillar, growing insurance telematics sales, ramping international sales, a growing product portfolio, an increasing list of new customer opportunities, and anticipated steady growth of higher-margin recurring revenue sales.”
On CalAmp’s partnership with Caterpillar, the analyst stated that although Caterpillar sales were sluggish during the first half of 2016, as expected, they turned around in Q3/2016 and he believes sales will continue in this direction going forward into 2017. Walkley states, “We believe CAT represents an ongoing growth opportunity through factory OEM and retrofit installs.”
The analyst then continued by commenting on the recent proposed LoJack acquisition, stating that although the company did not update its progress on this deal in its recent report, the company’s strong balance sheet can handle another M&A despite the $113 million price of the recent deal. The analyst is generally bullish on the proposed acquisition, as it “meets all four of management’s acquisition criteria of gross margin accretion, non-GAAP earnings accretion, vertical market alignment and/or channel leverage, and ease of integration.” Similarly, “this proposed combination would be immediately accretive to margins and adjusted EBITDA and offer additional synergies with CalAmp’s OB2, SmartDriverClub, and Crashboxx,” using LoJack’s brand and relationships with dealers to offer “telematics solutions and initiatives.”
Walkley maintains his Buy rating on the company and raised his price target to $27 from $26, based on his newly introduced F2018 estimates. According to TipRanks‘ statistics, analyst Michael Walkley has a 60% success rate recommending stocks with an average return of 15.5% per recommendation.