UPDATE: Nike Earnings Could Present a ‘Buy the Dip Opportunity’ – JPMorgan

By Sam Boughedda

Ahead of Nike ‘s (NYSE:) fiscal first-quarter earnings release Thursday after market, a JPMorgan (NYSE:) analyst told investors to buy the dip opportunity.

“Near-term, our model remains below Consensus for 1H23 modeling 1Q23 EPS of $0.87 (below the Street $0.94) based on reported revenue +1.1% (vs. Street +0.5%) or +6.9% constant-currency and 2Q EPS of $0.69.

In addition, looking ahead, JPMorgan’s fiscal 2023 “EPS of $3.50 is unchanged (vs. buy-side expectations of $3.20-$3.40 by recent incoming call volume and Street at $3.69).”

“Buy The Dip Opportunity: Based on recent incoming call volume see “peak negativity” into the 1Q print w/ shares down -42% YTD (vs. SPX -23%) and shares trading at 20x our CY24 EPS (= 5-year pre-pandemic trough or 7 turns below the pre-pandemic average) w/ investors braced for a FY23 EPS “cut” tied to (i) FX (high-single-digit USD appreciation since 6/27 vs. major exposures), (ii) greater than expected GPM pressure from inventory actions, and (iii) China overhang at 20% of sales (tied to continued lockdowns),” added the analyst.

The JPMorgan analyst sees an attractive risk/reward setup under $100.

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