Nike’s 3Q Profit Beat Estimates But Misses On Revenues; Shares Sink 4%

Nike, the footwear manufacturing company, posted better-than-expected fiscal 3Q earnings. Meanwhile, revenues for the quarter missed analysts’ expectations, impacted by supply issues and store closures due to the pandemic. Shares dipped almost 4% in Thursday’s extended trading session after closing 1.1% lower on the day.

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Nike’s (NKE) 3Q adjusted earnings rose 15.4% year-over-year to $0.90 per share and beat analysts’ expectations of $0.76. Revenues of $10.4 billion missed the Street’s estimates of $11.02 billion and inched down 1% from the year-ago period.

The company’s direct sales increased 16% year-over-year, while brand digital sales surged 54%. Additionally, Greater China revenues spiked 42%. However, North America and EMEA revenues decreased 11% and 9%, respectively. Moreover, revenues at global brand divisions plunged 32%. (See Nike stock analysis on TipRanks)

Nike’s CFO Matt Friend said, “We continue to see the value of a more direct, digitally-enabled strategy, fueling even greater potential for NIKE over the long term.”

Nike anticipates the resumption of share repurchases under its existing share repurchase program in the fourth quarter of fiscal 2021.

On March 17, Cowen analyst John Kernan increased the stock’s price target to $173 (20.8% upside potential) from $170 and reiterated a Buy rating as the analyst believes “the fears over Europe lockdowns and port issues in North America can be offset by underlying digital strength globally and in China.”

Nike shares have exploded 103.5% over the past year, while the stock still scores a Strong Buy consensus rating based on 25 Buys, 2 Holds, and 1 Sell. That’s alongside an average analyst price target of $164.07, which implies 14.6% upside potential to current levels.

What’s more, Nike scores a “Perfect 10” from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.