BNP Paribas Analyst

"The street is modeling the next two fiscal years for Nike to grow $2 billion each fiscal year... asking Nike to do that every year, and on top of that they need margins to come up materially to the point where margins are now 6% and the street is modeling 10% and I can't get there from a modeling perspective." Consensus estimates for Nike's revenue and margin growth are mathematically unrealistic given the structural macroeconomic slowdown in China, the deterioration of the Converse brand, and a shift in consumer preference away from legacy styles. SHORT. The fundamental math does not support the current valuation (trading at a 37x multiple), setting the stock up for inevitable earnings misses and downward revisions. A faster-than-expected turnaround in the core sports business, a successful divestiture of the Converse brand that unlocks value, or a sudden macroeconomic stimulus rebound in China.