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Takeaways From Deutsche Bank's Athletic Sector Debate

Takeaways From Deutsche Bank's Athletic Sector Debate - Footlocker Inc NYSE:FL, Nike, Inc. NYSE:NKE

Deutsche Bank published the takeaways of a recent athletic sector debate, which confirmed skepticism around the group. Following are the key takeaways on the most interested stocks in the sector including Nike Inc NKE, Under Armour Inc UA and Foot Locker, Inc. FL.

For Nike, the concerns were centered on decelerating average selling prices in North America and the company lowering prices on new KD and LeBron models.

"Our industry expert believed that Nike had pushed price points in basketball too high and was now retracting," analyst Paul Trussell wrote in a note.

On Under Armour, investors posed numerous questions on the next steps the company has to take to develop its footwear business and concluded that gaining credibility in the fashion/lifestyle space would be necessary for the category to take off. They also discussed on the diversification of athletic sponsorships, particularly in basketball.

"While UA does not yet compete with NKE and Adidas at the highest price points, we believe that it will eventually be able to do so with the proper investments," Trussell noted.

On Foot Locker, investor concerns include slowing basketball growth, tough competition from Nike, ASP pressure as consumers turn to low top models and SSS guidance that has not been reset to provide room for error.

"[O]ur industry expert highlighted that the Jordan Retro business remains robust, FL continues to get best allocation of marquee products from vendors including additional Adidas product sequentially, and a view that Nike's DTC efforts are not cannibalizing urban market sales," Trussell highlighted.

Deutsche Bank has Buy ratings on Nike, Under Armour and FootLocker.

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DateFirmActionFromTo
May 2016Deutsche BankMaintainsBuy
Apr 2016Cowen & CompanyDowngradesOutperformMarket Perform
Apr 2016Piper JaffrayUpgradesNeutralOverweight

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