AP/Mary Altaffer
- Nike is scheduled to release fourth-quarter earnings after the bell on Thursday.
- Wall Street is maintaining its overwhelmingly bullish view on the shoe giant amid investors' fears around business in China, where the broader economy is slowing.
- A declining number of retailers in China are seeing flat-to-positive Nike footwear and apparel businesses over the last two quarters, a recent Citi survey showed.
- Track Nike shares here in real-time.
Nike shares outperformed the broader market Thursday as investors readied for the shoe giant's fourth-quarter earnings results. Analysts were optimistic heading into the results after a disappointing third-quarter showing.
Investors' fears around China's slowing growth have loomed over Nike for months, as the company is highly exposed to its economy. The company and overwhelmingly bullish analysts have sought to put those concerns to rest, particularly amid US-China trade tensions.
Here's what analysts polled by Bloomberg expect Nike to report:
- Revenue: $10.16 billion.
- Adjusted earnings per share (EPS): $0.66.
"We lean positively into the print as we believe these concerns as well as China fears are overdone," Lauren Cassel, an analyst at Morgan Stanley, wrote to investors earlier this month. "NKE remains our top pick."
Cassel is far from alone in her view, with analysts and fund managers alike clammoring for the stock. Of analysts polled by Bloomberg, 26 carry "buy" ratings, eight carry "hold" ratings, and two carry "sell" ratings. And it's one of active managers' most overweighted consumer discretionary names, according to Bank of America Merrill Lynch.
"Tariff concerns are overblown," Sam Poser, a bullish analyst at Susquehanna, told investors ahead of Nike's earnings.
Nike manufactures around 25% of its footwear and apparel in China, Poser noted, but he's found less than 10% of that product is imported to the US. Poser trimmed his earnings estimates for both 2020 and 2021 due to foreign-exchange headwinds.
Signs of slowing in China have reared their head. A declining number of retailers in China are seeing flat-to-positive Nike footwear and apparel businesses over the last two quarters, a Citi survey released earlier this month showed.
"Whether this will impact NKE's results next week is unclear (there is often a lag), but our survey suggests that a weakening macro environment in China is a concern for retailers of Nike product," Paul Lejuez, the firm's analyst who remains positively rated on the stock, said.
The Oregon-based company has voiced concerns over the trade war in recent months. In May, Nike and 172 other footwear companies urged President Donald Trump in a letter to remove shoes from the list of goods subject tariffs.
Nike shares have rallied 13% this year, underperforming the S&P 500's 17% gain.
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