NIKE: Color on Quarter
- Telsey Advisory Group raises their NKE tgt to $63 from $62. 4QF17 unfolded in a very similar fashion to 3QF17 with an EPS beat that was driven by well-managed SG&A and a lower tax rate. Futures also came in light once again, though they believe that has become less of an issue as Nike's sales outpace futures at a growing rate (800 bps in 4QF17 vs. 500 bps last quarter). Looking ahead, the co cautioned that North America remains choppy and guided to slight contraction in the first half of the year, as it deliberately exits less-productive and less-differentiated distribution. However, the full-year guidance was better than whisper numbers, which had fallen significantly, and mgmt was able to talk about an inflection in Basketball and strong results from recently-launched product innovations that should drive growth in 2HF18. The retail environment is tough, but they believe Nike is on the right path and want to be involved ahead of a potential turnaround.
- Stifel: Against a backdrop of low expectations, NIKE delivered solid FY4Q results packaged with a notable emphasis of a strategic shift to direct consumer engagement. They found the coherent discussion of strategic direction encouraging and see NIKE uniquely positioned to execute to a more direct model which they expect translates to growth, margin improvement, and strengthening ROIC longer-term. While market concerns around challenges in the North American market may limit multiple expansion near-term, they remain confident in their Buy rating.
- FBR & Co notes co beat Q4 results and guided Q1 below. Futures were reported below expectations with currency-neutral total futures of 0% (vs. consensus of +1.5%). Amid the Amazon pilot, they believe NKE will maintain its rigorous product segmentation and reserve premium products for sale through its own website and select retail partners. They like Nike's innovation pipeline, int'l runway, and LT margin catalysts, but they remain on the sidelines and look for improved rev growth, margin execution, and lower inventory growth.