Nike stock bounces, but another analyst cuts price target ahead of earnings
Shares of Nike Inc. edged up 0.2% in morning trading Wednesday, after slumping 4.5% the previous session to close at a near three-month low, but the drumbeat of downbeat analyst calls continued ahead of the sporting apparel and accessories giant's first-quarter earnings report. Deutsche Bank analyst Gabriella Carbone reiterated the buy rating on the stock, but cut the price target to $123 from $130, saying she expects Nike to miss profit expectations due to weakness in China, currency headwinds and greater-than-expected contraction in gross profit margins (GPM). "NKE's high inventory position at the end of fiscal 4Q (up 22.8% with a spread vs. total sales growth of -2,370 bps) and the increasingly promotional environment in both North America and China, leads us to believe that GPM could be below Street forecasts," Carbone wrote in a note to clients. Nike is scheduled to report earnings on Sept. 29, after the closing bell. No less than two analysts have downgraded Nike in the past week, and seven analysts have cut their stock price targets this month, ahead of the results. Nike's stock has dropped 5.6% over the past three months, while the Dow Jones Industrial Average has gained 1.2%.
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