Nike’s (NKE) fiscal Q3 EPS could top market expectations when it releases its results March 21, with outperforming gross margin driving the upside, Morgan Stanley said in a Tuesday note.
The investment firm said it also expects Nike’s gross margin to outperform in fiscal Q4 as it models underlying sales growth trend to continue into the last fiscal quarter. It added that Nike could keep its low guidance bar for Q4 and the full year due to recent market volatility and challenged core demand trends.
Morgan Stanley said Nike’s return to high-single-digit revenue growth would be a “meaningful” catalyst for the stock, but this is unlikely in fiscal Q3 and could be seen in fiscal 2025 at the soonest.
Morgan Stanley reiterated its overweight rating on Nike, while lowering its price target to $124 from $125 previously.