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Nike Inc (NKE), Under Armour Inc (NYSE:UA) and Finish Line Inc (FINL): Sterne Agee Weighs In

By Austin Angelo

Of late, the athletic retail area has seen a lot of activity with the growing “athleisure” trend. Athleisure is a style of apparel that serves two purposes; along with its traditional use during workouts, athleisure apparel is stylish enough to be worn as everyday casual wear. Analyst Sam Poser from Sterne Agee CRT covers top athletic apparel retailers like Nike Inc (NYSE:NKE), Under Armour Inc (NYSE:UA), and Finish Line Inc (NASDAQ:FINL). Let’s look at Sam’s ratings and forecast for these three companies.

Poser has maintained a Neutral rating on dominant athletic retailer, Nike. While he acknowledges its strong presence in the industry, he is concerned about ongoing challenges such as the slowing Chinese economy and the volatile foreign exchange situation. In light of these challenges, Poser sees limited upside for the stock from hereon in. In terms of EPS estimates, Poser said, “Lowering FY16/17 EPS estimates from $4.13/$4.76 to $4.04/$4.58 due to FX and likely China pressures.”

Out of the 13 analysts polled by TipRanks in the last 3 months, 9 are bullish on Nike and 4 are neutral. The average 12-month price target between the analysts is $123.36, marking a 5.5% potential upside from current levels.

In the company’s recent investor day, Under Armour management laid out the company’s future growth plans for top-line and bottom-line performance. In light of these plans, Poser maintained a Buy rating for the company with a price target of $120. He affirmed, “UA continues to be our #1 pick for long-term growth investors.” Referring to his projections, he said, “Revenue CAGR of 25% (2014-2018) is broad based, with the strongest growth coming from the international, footwear, DTC, and women’s businesses. 2018 operating margin target of $800M equates to a 23% CAGR.”

According to TipRanks, 12 analysts have rated Under Armour in the past 3 months. Of which, 8 are bullish and 4 are neutral. The average 12-month price target on the sporting wear company is $112.11, marking a 7.7% upside from where the stock is currently trading.

Finish Line is expected to release its 2Q16 earnings this week on September 25. Poser has maintained a Neutral rating for the stock. The analyst explains that some of the company’s Q2 sales will shift to Q3 due to Labor Day/BTS season. In this context, Poser said, “As such, QTD results in September will likely be strong, but will fade away throughout the rest of 3Q.” He expects the company to continue losing market share in the B&M category to Foot Locker, another leading athletic apparel brand. However, given the strong athletic cycle, it will not be too difficult for FINL to achieve its guidance.

Poser is the only analyst who is staying on the sidelines of Finish Line. Out of 7 analysts polled by TipRanks in the last 3 months, 6 are bullish on the stock while Poser is neutral. The average 12-month price target is $32, marking a 28% potential upside.

Sam Poser is a top-ranked analyst with a 68% success rate recommending stocks and a +20.8% average return per rating when measured over a one year horizon and no benchmark.