Ahead of Nike's (NYSE:NKE) next earnings release, Barclays analysts lowered the firm's price target on the stock to $127 from $154, maintaining an Overweight rating.
The analysts told investors in a note that they see a potential risk to FY24 guidance due to North America Wholesale, offset by DTC and China reopening.
They feel the strength and quality of the China recovery are the main questions for longer-term investors and that the wholesale risk is "well understood."
"We expect a roughly inline quarter with freight and accretive China growth as margin drivers," they wrote. "We believe FY4Q23 sales could be largely inline with consensus, with potential NA wholesale pressure offset by China reopening upside. We could see slight EPS upside on margin drivers, such as freight, accretive China segment contribution, and lower demand creation and operating expenses."
"For FY4Q23, we are now forecasting revenue of $12.64bn versus consensus of $12.57bn, consisting of North America (Barclays +1.2% vs. Bloomberg cons. +3.5% y/y) and Greater China (Barclays +6.8% and +12.9% constant currency vs. Bloomberg cons. +4.6% y/y and +9.6% constant currency). By product category, we expect, once again, footwear to outperform apparel on with both positive units and average selling price (ASP)," the analysts added.
Nike shares are down around 1% on Friday, trading below the $109.50 mark.