Nike (NKE) is scheduled to report results of its first fiscal quarter after the market close on September 29, with a conference call scheduled for 5:00 pm ET. What to watch for:

GUIDANCE: In June, Nike forecast revenue for Q1 to be flat to slightly up sequentially, with FX having a 500 basis point impact. The company also said it expected fiscal 2023 revenue growth in the low double digits, with FX having a 400 bps impact. Analysts currently expect revenue of $12.27B and $49.83B for Q1 and FY23, respectively.

Cowen analyst John Kernan is cautious into earnings as there was a deterioration in blended FX rates relative to the USD since July and he is lowering his sales and EPS estimates largely on FX and increased concerns about the European consumer.

EARNINGS 'UNLIKELY TO MOVE NEEDLE': Morgan Stanley analyst Alex Straton stated that he suspects SG&A conservatism can offset potential revenue and gross margin pressure and result in Nike results coming in in-line with expectations. However, ongoing macro risk, an unlikely resolution to the China debate, and softening industry trends in North America and the EU could mean Nike lowers its fiscal year guidance, said Straton in a Q1 preview note partially titled "Unlikely to Move the Needle."

Wedbush analyst Tom Nikic said that while Nike is one of the strongest brands and companies in his coverage, it is not immune to macro challenges. The firm's "Just Kickin' It" report shows that for August, 22 products that sold out are trading at premiums in the resale market, which is down from last August's 25 "hot" launches.

'PEAK NEGATIVITY': JPMorgan analyst Matthew Boss says that based on recent incoming call volume, he sees "peak negativity" into Nike's fiscal Q1 print on Thursday with the shares down 42% year-to-date. The shares are trading at 20-times estimated 2024 earnings, seven turns below the pre-pandemic average, Boss tells investors in a research note. He sees an attractive risk/reward setup under $100 per share given Nike's earnings "stability" and valuation multiple support.

WEB TRAFFIC TRENDING NEGATIVE: Jefferies analyst Randal Konik said that Nike's web traffic has trended negative, Chinese apparel and footwear sales declined in August, and the U.S. dollar strengthened. Konik has lowered his FY23 sales and earnings estimates below consensus as he now forecasts sales of $49.3B and EPS to $3.40. While in the short-term he sees it being difficult to be bullish on the space, Nike appears to be winning the "sneaker war" and he maintain his long-term Buy rating "based on the company's track record of innovation and maintaining cultural relevancy," Konik added.

Meanwhile, Citi analyst Paul Lejuez and the firm conducted a survey of 1,000 Chinese consumers and 1,600 North American consumers to gauge the momentum of the Nike brand. The survey suggested continued pressure in disposable income and higher promotions overall versus June, Lejuez told investors in a research note. The North America survey suggests Nike is in "good standing with the consumer" but that the promotions have "ticked up" and disposable income remains pressured, says the analyst. He reduced his Q1 and fiscal 2023 estimates primarily to reflect a weaker outlook in North America and ongoing macro risks related to inflation and elevated inventories.

EARNINGS RISK, EXCESS INVENTORY: Barclays analyst Adrienne Yih downgraded Nike to Equal Weight from Overweight with a price target of $110, down from $125. The analyst cites her "bearish" wholesale sector demand risk thesis, continued volatility in China, excess North America inventory bringing heightened operating risk, and currency headwinds, primarily in Europe, for the downgrade. Nike could report in-line sales and earnings in fiscal Q1 if it again pulls back on demand creation, but such a composition in the quarter would be "low quality," Yih tells investors in a research note.

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