While the worlds second-largest athletic brand continues to struggle in the U.S., its Portland cross-town “rival” appears to be hitting on all cylinders, issuing increased guidance for its latest quarter.
Nike Inc. announced last week that fiscal third quarter earnings would exceed Wall Street estimates, due primarily to the weak dollar and strong U.S. demand. The company now sees diluted earnings per share to be in the 71 cents to 74 cents range on a “more than 20%” increase in revenues over fiscal Q3 LY.
The company reported earnings of 47 cents per share on sales of $2.4 billion in the year-ago quarter, but said last year's revenue was “unusually low” due to the timing of shipments. Analysts on average were looking for just 64 cents per share this year.
NKE shares hit an all-time high, closing at $76.65 on Wednesday. Shares finished flat for the week at $74.80, up more than 55% in the last year.
Nike chairman and CEO Phi Knight said in a release that sales for the quarter ending February 29 were up on strength in the U.S and Asia/Pacific regions and favorable FX rates with the Euro. He said consumer demand for Nike products “continues to grow”.
“We are seeing a return of consumer interest in both the Nike brand and the Converse brand in its Asian markets,” said Wells Fargo Securities analyst John Shanley in a report. He now expects NKE to earn 73 cents a share, up from a previous forecast of 62 cents a share and increased his price target to $83 from $73.
Dennis Rosenberg from Credit Suisse First Boston raised his target price on Nike to $90 from $80 while leaving his Q3 estimate at 68 cents a share. He also raised his full year earnings estimate to $3.45 a share, from $3.40 a share.
Both analysts pointed to the European (Soccer) Championship in June and the Olympics in August as key drivers for the Europe business.
NKE still expects revenue for the fourth quarter to increase in the high single-digits.
>>> With a Market Cap approaching $20 billion, these guys continue to separate themselves from the rest of the industry
>>> Think about it. They will INCREASE sales by at least $480 million in the QUARTER alone…
