Nike stock: China concerns weigh on NKE earnings

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Nike (NKE (opens in a new tab), $161.78) features a slim earnings schedule this week. BofA Global Research analysts Lorraine Hutchinson and Christopher Nardone expect no surprises when the sportswear maker reports second-quarter results after Monday’s close.

Indeed, Nike may have taken the street by surprise in its last two reports, updating its five-year plan in June and then lowering its sales forecast for fiscal year 2022 in September – the latter due to chain problems. procurement and COVID-related plant closures. in Vietnam and Indonesia. But management has already warned of a few tough quarters ahead, analysts said.

As for the specifics of the report, Hutchinson and Nardone will be watching for updates on China, where data points remain volatile following supply chain disruptions and the brand’s boycott last spring by consumers across the country. continent.

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Specifically, data from Tmall – a China-based e-commerce site operated by Alibaba (BABA (opens in a new tab)) – shows that Nike’s revenue fell 31% year-over-year during the company’s second fiscal quarter, while monthly sales for Pou Sheng, a major Chinese distributor of NKE, fell by 30% compared to the previous year. The pair has a Neutral rating on the title – which is the equivalent of a Hold – indicating that “risk/reward remains balanced until we have more visibility on the rebound in China”.

This perspective is shared by Jay Sole, an analyst at UBS Global Research. “Sentiment on Nike has improved over the past two months as the issue of the factory closure in Vietnam subsided,” Sole wrote in a note. However, he is keeping his expectations in check despite “concern over Nike’s performance in China”.

Still, Sole has a buy rating on Dow Jones stock. “We continue to believe that Nike will be a long-term global equity taker (including in China) and outperform in the short term,” he said.

Amid those overhangs, analysts, on average, expect Nike to report a 19.2% decline in year-over-year (YoY) earnings to 63 cents per share. Revenue is expected to climb to $11.26 billion from $11.24 billion last year.

Micron stock rebound halts before earnings

After bottoming out near $66 in mid-October, Micron Technology (MU (opens in a new tab), $82.13) rebounded strongly, gaining more than 38% to reach late November highs around $87. More recently, however, that rally has stalled, with MU shares last seen trading closer to $82.

Can earnings give semiconductor stocks the boost they need to end the year strong?

“We find that earnings and guidance are biased to the upside amid early signs of improvement in calendar fourth quarter DRAM contract pricing which we expect will continue through the February quarter and into the February quarter. summer of 2022,” said UBS Global Research (Buy) analyst Timothy Arcuri. As such, it raised its price target on MU to $99 from $90 ahead of the company’s fiscal first quarter earnings report, which is expected to be released after Monday’s close.

Arcuri isn’t alone in having an optimistic view of Micron. Of the 35 analysts covering the stock who are tracked by S&P Global Market Intelligence, 20 call it a strong buy and seven say buy. That compares to six having it on hold, one rating it a sell, and one having it a strong sell.

As for MU’s upcoming earnings report, consensus estimates call for earnings of $2.11 per share (+170.5% YoY) and revenue of $7.67 billion, an improvement of 32.9% compared to the period of the previous year.

Analyst: Expect CarMax Earnings to Beat Estimates

Used car dealership CarMax (KMX (opens in a new tab), $tk) flourished in 2021 as a global chip shortage created a shortage of new vehicles – and drove up sales (and prices) of used vehicles. Year-to-date, the stock is up 50%, although it is currently down about 10% from its mid-November high of around $156.

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So what should we expect from KMX’s third quarter earnings report, which is due out before the December 22 open?

“We believe CarMax is on track to easily beat consensus expectations in the third quarter given very good sales momentum, improving inventory levels, improving conversion to better levels staff and continued strength in used car prices,” said Sharon Zackfia, analyst at William Blair. She has an outperform rating on the stock, which equates to a buy.

With respect to these consensus estimates, analysts on average expect third quarter earnings per share of $1.46 per share, up 2.8% from a year earlier, and revenues of $7.34 billion (+41.7% year-on-year). By comparison, Zackfia is forecasting slightly higher earnings of $1.48 per share on $8.08 billion in sales.

Karee Venema has long been NKE at the time of this writing.

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