The massive athletic apparel company Nike Inc. (NKE) is expected to release its quarterly earnings report this week. Despite a difficult economic climate, it offers a glimpse into consumer demand for sneakers and sportswear. Wall Street has low expectations for Nike because of pressure from competitors and ongoing lackluster sales trends.
Nike Earnings Trend Looks Potent
Despite efforts to spark enthusiasm with new product lines, including upgraded "Air" technology, Nike has had slow in-store and online sales. Due to economic slowdowns, the company's performance in China has been especially dismal. The company confronts fierce competition from other sneaker brands.
According to UBS analyst Jay Sole's observation from last week, no significant changes have occurred since Nike's most recent quarterly results in March. He emphasizes that sales growth rates have not yet indicated recovery, indicating his continued skepticism about an impending reversal.
In its second-quarter earnings report Last December, Nike emphasized "increased macroeconomic headwinds," notably in Europe, the Middle East, Africa (EMEA), and Greater China. To effectively address these challenges, the organization has also disclosed its intention to reduce expenditures by $2 billion over the next three years.
Nike Earnings Forecast
According to analysts, Nike's top-and-bottom-line results are expected to improve compared to last year. Visible Alpha estimates that the organization is anticipated to generate $1.28 billion in net income, or 84 cents per share, on $12.9 billion in revenue. In the fourth quarter of the previous year, Nike generated $12.83 billion in revenue, resulting in a profit of $1.03 billion, or 66 cents per share.
According to Wedbush Securities analysts, NKE's Q4 earnings are anticipated to closely align with consensus estimates, which may not substantially impact its stock price. Furthermore, during its Q3 earnings call, the organization already furnished some fiscal 2025 guidance.
Nike Stock: Key Concerns
NKE CFO Matthew Friend anticipated a revenue decline in the low single digits during the Q3 earnings call for the first half of fiscal 2025. This conservative outlook was ascribed to Nike's endeavors to emphasize innovation and newness.
Nike is also battling the impact of rising costs for necessities, which have changed people's spending habits. The company's earnings reports for this week will provide insight into how much money people have available for non-essential expenditures, such as sports equipment.
Investors will closely monitor Nike's performance as the second quarter results season draws near to see if the company's initiatives to combat competitive headwinds and boost sales are starting to bear fruit.
Nike Stock Forecast Technical Analysis
In the daily chart of Nike stock price, the recent price shows a stable uptrend as it trades within an ascending channel. The 100-day simple moving average is acting as an immediate resistance, while the high volume level since November 2023 is at the 92.36 level.
Considering the upcoming earnings report, the primary aim for this stock is to achieve a breakout from the channel, with a daily close below the high volume line before anticipating a downside continuation.
On the other hand, the price is trading at a discounted area where the 88.71 level is acting as a crucial double bottom pattern. In that case, a stable market above the 100-day simple moving average could extend the upward possibility above the 107.28 resistance level.
