NIKE: Color on Quarter
- Telsey Advisory Group raises their NKE tgt to $136 from $128 The company posted a stronger-than-expected 1QF16 result, driven by upside across the board, and was able to grow EPS by 24% despite the strong headwind from F/X. However, the "wow" factor for them was the 17% CC increase in futures, which implies the potential for an even greater acceleration in the next few quarters. The sporting goods space remains robust and Nike continues to gain share. The company has an analyst day coming up in October and will also be heading into an event year in 2016 that should keep the industry in the spotlight. They recently upgraded the stock to an Outperform and reiterate their favorable thesis.
- FBR & Co raises tgt to $210 from $109 (26x FY17 FBR EPS vs. 24x previously), reflecting consistent execution and a higher revenue trajectory, but maintain their Market Perform rating (they see valuation as relatively full given estimated +LDD/+LT EPS growth trajectory). Currency-neutral Sep-Jan futures growth of +17% well exceeded expectation, indicative of increased demand. North American demand remains strong with +15% currency-neutral futures growth, but there is potential near-term DTC sales/margin pressure (potentially through F3Q) as elevated inventories from port delays are cleared. However, they expect investors to be more focused on strong top line/demand and potential upside via perceived conservative implicit FY16 EPS guidance.
- Stifel raises their NKE tgt to $135 from $118. Accelerating demand despite difficult compares and macro challenges they view as further evidence of the growing global concern for health and fitness and the expanding wearable occasion for NIKE products. They expect the 2016 Olympics brings additional energy to this mega-trend in FY17. While they see potential for incremental infrastructure and brand investment to be an offset, they remain comfortable positioning their estimates ahead of implied guidance. Given fundamental momentum, increasingly evident secular tailwinds from growing global concern for health and fitness, and structural tailwinds to the higher margin DTC business, they continue to view NIKE as a solid core holding.
- Stene Agee upgrades to Buy from Neutral