Consumer Discretionary

Nike’s Q3 Fundamentals ‘Lackluster’ Though Likely in Line With Expectations, UBS Says

/ / Consumer Discretionary /

Nike’s (NKE) fundamentals for Q3 are “lackluster,” but likely aligning with sell-side expectations, UBS said in a report emailed Tuesday. “We don’t anticipate Nike changes its [fiscal year 2024] guidance or gives an initial view of FY25,” UBS said, adding that it doesn’t expect Nike’s report to change analysts estimates much. “We see a balanced upside/downside skew over the event,” UBS said. The upside risk is Nike’s margins outperform expectations, while downside risk is if sales fall short of expectations and sentiment proves more bullish than anticipated by investors, it added. According to UBS Quant Team’s crowding data, Nike is currently experiencing high levels of crowding, with a score of 27, which has risen notably in the past week. This score surpasses Nike’s five-year average of 19.2. “This matches what we hear in conversations with investors,” UBS said. “The market knows Nike has struggled recently, yet is looking at the […]

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Nike Sentiment Appears Too Bullish Ahead of Fiscal Third-Quarter Print, UBS Says

/ / Consumer Discretionary /

Nike (NKE) sentiment may be overly optimistic heading into its fiscal third-quarter results with checks suggesting the March 21 report will underscore lackluster fundamentals, according to UBS. The sports apparel retailer will likely post results that are downbeat but within expectations and leave its fiscal 2024 guidance unchanged, analysts Jay Sole, Tiffany Agard and Mauricio Serna wrote in a Tuesday note. UBS reiterated a buy rating and $138 price target on the stock. “The market is looking for an inflection in Nike’s sales growth trend, but probably won’t get one,” they wrote, adding that they see a balanced upside/downside skew over the event. Industry data show a sequential low-double-digit percentage decline in global web traffic to Nike.com during the quarter, according to the brokerage’s report. UBS reiterated its per-share earnings target of $0.78 for the third quarter but reduced its fourth-quarter estimate to $0.79 from a prior view of $0.83.

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CFRA Keeps Hold Opinion On Shares Of Southwest Airlines Co.

/ / Consumer Discretionary /

CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows: Our 12-month target of $30, cut $2, is 19.9x our ’25 EPS view (cut to $1.51 from $1.53; we cut ’24’s to $1.05 from $1.23), below LUV’s historical average, on persistent aircraft delivery delays. Shares are down ~15% today after LUV announced that it plans to trim its ’24 capacity outlook, while revising its Q1 24 guidance. LUV announced today that it expects to see around 42% fewer deliveries of Boeing’s (BA 184 **) 737 MAX aircraft in ’24 than it had initially expected (46 new aircraft deliveries vs. prior guidance of 79 aircraft), given the persistent regulatory scrutiny that BA has faced since a door panel blew off mid-flight on an Alaska Air Group (ALK 39 ***) operated flight in January, making it the second time

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Ross Stores Opens 18 New Locations; Co Targeting ~90 Openings In 2024

/ / Consumer Discretionary /

TARGETING APPROXIMATELY 90 OPENINGS IN 2024 DUBLIN, Calif., March 11, 2024 /PRNewswire/ — Ross Stores, Inc. opened 11 Ross Dress for Less (“Ross”) and seven dd’s DISCOUNTS stores in 11 different states in February and March. These new locations are part of the Company’s plans to add approximately 90 new stores, comprised of about 75 Ross and 15 dd’s DISCOUNTS, during fiscal 2024. “This Spring, we continued to expand the store base of both Ross and dd’s. Specifically for Ross, we expanded our presence in the newer markets of Michigan and New York, while dd’s growth primarily focused on existing markets of California, Florida, and Texas,” said Gregg McGillis, Group Executive Vice President, Property Development. “We now operate a total of 2,127 Ross Dress for Less and dd’s DISCOUNTS locations across 43 states, the District of Columbia, and Guam. As we look out over the long term, we remain confident

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Costco Wholesale Shows Positive Momentum Across All Metrics, BofA Says

/ / Consumer Discretionary /

Costco Wholesale (COST) is showing positive momentum across all metrics, BofA Securities said in a report emailed Monday. Costco’s fiscal Q2 adjusted earnings, excluding tax benefits, stood at $3.71 per share, ahead of estimates. The company’s overall comparable sales grew by 5.8%, propelled by a 5.3% rise in foot traffic. BofA said. “While investors had likely hoped for a membership fee increase, we believe current trends support continued strong [membership fee income] growth,” it added. The company’s membership fee income and trends are growing positively, with a 7.8% year over year increase in total member households, a rise in executive member penetration to 46.2% and an uptick in renewal rates to 92.9% in fiscal Q2, the report said. BofA expects strong member engagement from strategic initiatives including digital advertising and enhancements and adjusted the company’s fiscal 2024 EPS to $16.02 from $15.90 and fiscal 2025 EPS to $18.25 from $17.90.

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Costco Stock Extends Losses. Why Wall Street Thinks the Downturn Won’t Last. — Barrons.com

/ / Consumer Discretionary /

By Sabrina Escobar Costco Wholesale stock was on track for its second straight day of losses Monday following backlash from a lackluster fiscal second-quarter earnings report. Take advantage of the dip, some analysts said, but be wary of the stock’s valuation. Shares of Costco were falling 1.6% to $713.83 on Monday after closing around 7% lower Friday in the stock’s worst trading day in nearly two years. The past two trading days essentially have erased the stock’s nearly 9% gain over the past month. At the heart of the pullback was Costco’s slight revenue miss for the holiday quarter, which ended in mid-February. As Barrons’ Andrew Bary noted this weekend, a quarterly sales increase of 6% was hardly enough to justify the stock’s lofty valuation. Before Thursday’s earnings report, Costco traded at a record 48 times forward earnings. On Monday, Costco’s price-to-earnings ratio had ticked down to 43.6 — but

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