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They noted that shares are down over 10% in August, which prompted higher investor interest in this retailer.
“We view negative revisions from these retailers company-specific and remain comfortable with NKE North America estimates which already presumed wholesale declines against difficult compares,” the analysts said in a note.
Moreover, they highlighted economic issues and cautious consumer sentiment in Greater China as a “greater than anticipated headwind.”
“In the multi-year plan outlined in June 2021, Greater China was planned at a low to mid-teens CAGR and outlined as ~30% of incremental revenue. While other regions have paced ahead of objectives (notably North America +12% vs. M/HSD objective), China remains central to the growth algorithm.”
“Until a more buoyant view on China becomes tangible, the normalized growth algorithm looks more like +HSD vs. more ambitious +LDD aspirations. We note, fiscal stimulus in China could bring a sudden change to sentiment and growth outlook for the region,” they further noted.
Still, the analysts reiterated a Buy rating as they remain constructive on margin prospects.
Nike’s recent stock losses wiped out more than $18 billion in market value.
