The weeks spanning February through March are a major seasonal period for Nike and the U.S. footwear industry at large, particularly in basketball and urban design categories, Stifel analysts said in a note. The period can represent about a low-20s percentage portion of the year's sales.
And this year, Nike is staging a comeback.
"In the eight-week period from the start of February through the end of March, there are more than 200 scheduled sneaker releases with more than 150 from the Nike and Jordan brands alone," Stifel said. Nike is expected to start 2018 with a strong offering, Stifel noted, following a lackluster performance in early 2017 that crippled pricing power for most of the year that followed.
Nike will release a number of "marquee styles and premium price points" to coincide with both the hype surrounding the NBA All-Star Game on Feb. 18, and the influx of consumer spending expected to follow tax returns in the coming weeks. Stifel noted that the success of the late-winter and early-spring designs can be predictive of category relevance, brand momentum and pricing power for back to school.
"With a healthy economic backdrop and easier compares against disappointing reception a year ago, we see the February and March release period setting the stage for Nike to return to growth with expanding margin in the North America region in FY4Q18 (May)," analysts wrote.
Stifel expects above-consensus reports from Nike for both fiscal 2018 and fiscal 2019. Stifel analysts forecast Nike will earn $2.37 a share for 2018 compared to Wall Street's $2.29 prediction. For 2019, Stifel expects Nike to earn $2.92 a share, up from the consensus estimate of $2.67.
Stifel hiked its price target on buy-rated Nike stock to $80 from $74, implying a 17% upside for shares. Nike stock traded higher 0.5% to $68.65 just after the opening bell on Friday.