Nike loses important support ahead of earnings. Here are the possible reasons
- Nike is expected to post $0.91 EPS in quarterly earnings this week
- BofA analysts see a gloomy outlook in China and higher forex risks
- Nike stock has broken below key support amid a $122 target by BofA
Nike Inc. (NYSE:NKE) reports earnings on September 29 after the market close. However, there is a gloomy sentiment for the stock, which has maintained a downtrend. According to 12 analysts tracked by Zacks Investment Research, earnings per share of $0.91 is on the cards. The earnings are below the prior year’s quarter of $1.16 per share.
BofA analysts believe Nike’s biggest headwind is the company outlook. The analysts say growing uncertainty in China and forex issues will be more important than the quarterly performance. According to the BofA report, China’s recovery and North American demand trends will be the key points. China’s demand situation is still “cloudy” amid Covid-19 lockdowns and the boycott of Nike’s products.
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On foreign exchange outlook, BofA says Nike faces up to $0.20 per share exposure due to a stronger dollar. With these exposures in mind, the analysts project a 21% decline in EPS to $0.91. They, however, maintain a neutral rating on the stock, with a $122 target. Should you buy at the current $96?
Nike maintains a downtrend amid weak expectations in earnings
Turning to the technical side, Nike remains bearish after crashing below the $100 support. The MACD indicator shows a growing bearish momentum. As jitters around outlook and earnings continue, Nike could fall further. We recommend staying away until a clear bullish reversal emerges and the outlook comes clear.
Should you invest in Nike now?
This article finds Nike stock on a clear downtrend. If the outlook remains uncertain, the stock could fall further. Investors should wait to buy lower based on assessments of outlook and earnings.