Nike Set to Drive Revenue Growth Into Fiscal 2020 as Canaccord Sees Strong Product Pipeline

Nike (NKE) has several ways to drive revenue growth in fiscal 2020 and beyond with a strong pipeline of products and new technology and marketing for some of its brands, while supplier data is showing growing demand, Canaccord Genuity said on Wednesday.

The athletic-gear maker should post high single digit revenue growth on a constant currency basis for its fiscal 2019 fourth quarter on June 27, although foreign-exchange headwinds will “likely cap significant upside” and analyst Camilo Lyon is modeling 3.8% sales growth for the period.

“FX pressure should dissipate significantly the following quarter (fiscal 2020 first quarter) as new hedges take effect,” Lyon said in a note that reiterated Canaccord’s buy rating on the stock and a $96 price target. “Our channel checks coupled with robust mid single digit comp growth from retailers like Foot Locker and Hibbet indicate increasing scale and strength of sell-throughs in several key footwear platforms (VaporMax, Air Max 270/720, React).”

Beaverton, Ore.-based Nike’s shares ended nearly 1% lower on Wednesday.

Into 2020, key retailers are offering positive commentary about Nike’s product pipeline, Lyon said. The Jordan brand is expected to show further improvements with new product launches and “amplified” marketing while innovations in the core footwear group of under $100 should lead market share gains in the mid-tier channel.

“Women’s should also continue to be a key growth driver in F20 given the increased focus on the female consumer,” he said. “Lastly, an elevated consumer experience through the SNKRS app, NikePlus membership and Nike app at retail should continue to drive accelerated growth in digital.”

Lyon said Canaccord see high single-digit sales growth in the current fiscal year and beyond, as a key Nike supplier, Taiwanese shoemaker Feng Tay, reported “meaningful acceleration in demand.” The company’s footwear production grew a “robust” 5% year-on-year in the quarter ended May.