BofA sees Nike reporting 2Q and 3Q sales miss

BofA raised its Nike (NYSE:) price target to $130 from $110 in a note Friday. However, the firm said it is modelling a consensus sales miss for the sportswear giant in both 2Q and 3Q24.

While the firm expects Neutral-rated Nike to beat consensus EPS expectations, they note that with the stock trading at 32x P/E, the key debate has shifted to the sales turnaround.

In the firm’s view, this quarter won’t answer the sales questions, nor will 3Q guidance. “The full year relies on a 4Q sales acceleration once 2023’s excess inventory sell-in is lapped,” analysts said.

“We will look for signs of accelerating DTC (direct-to-consumer) trends and successful innovation as proof points for this ramp,” the analysts added.

The investment bank believes that improving data points on China, a better narrative on the promotional environment, and more details about product innovation are needed to spark multiple expansion.