Deutsche Bank recently held a bull versus bear debate with an athletic sector expert. Here’s an overview of the bull and bear cases for Nike Inc NKE 0.23%.
Bull Case
- The North American business still has another leg up.
- ASP growth remains strong.
- The North American full-price channel is cleared, and the company is working on clearing the factory/value channel as well.
- Shifted emphasis on DTC, apparel and foreign markets has created an unparalleled gross margin expansion opportunity.
- Nike’s business is tied to a growing middle class in emerging markets, and global sports participation is on the rise.
- The stock’s 10.8 percent 2016 pull-back is an opportunity to buy the dip.
- Government policies in China support athletics.
Bear Case
- Competition from Under Armour Inc UA 0.72% and others in the North American market is heating up.
- ASP growth has slowed in the past year.
- Inventory positions in Greater Europe, Greater China and Japan worsened in Q4.
- Q4 gross margins came up well short of consensus analyst expectations.
- International markets are…
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