Published - June 27, 2022 @ 14:13 PM (EET)

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Heading into this week's markets, athletic footwear and apparel maker Nike Inc. (NYSE:NKE) will release its fourth-quarter earnings results on Monday after the market close.

Since the footwear giant disappointed Wall Street giants in its previous quarter with revenues rising just 5%, investors worry that economic uncertainty and high inflation will make American shoppers less willing to spend.  

Some also fear that Nike might continue to lose ground to Lululemon Athletica (NASDAQ:LULU), which recently announced robust sales.  The chain said in early June that revenue jumped 32%, while investors are less enthusiastic about Nike's short-term growth potential.

Most Wall Street analysts expect Nike sales to decline 1% to roughly $12.2 billion. 

Looking ahead, investors should keep a close eye on Nike's inventory levels as a big jump might indicate price cuts are on the way, which may be needed to keep merchandise moving through its supply chain.

RUSSIA EXIT

Elsewhere, the company joined other major Western brands in confirming it is making an official exit from Russia after suspending its operations in March.

The firm said in an email statement that,

"NIKE has made the decision to leave the Russian marketplace.  Our priority is to ensure we are fully supporting our employees while we responsibly scale down our operations over the coming months." 

STOCK RATING

Last week, Seaport Global downgraded Nike's previous Buy rating to Neutral.  In addition, Telsey Advisory Group analyst Cristina Fernandez lowered the company's price target from $170 to $140 and kept an Outperform rating on the shares.

More optimistically, however, Guggenheim analyst Robert Drbul recently maintained his bullish stance on the stock and reiterated a Buy rating.  

He said, "While we do not believe Nike is immune from the numerous challenges brought on by COVID-19, logistics, and other geopolitical uncertainties, we believe many of these issues are transitory in nature."

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Since the stock's last earnings release, shares of the shoemaker have dropped more than amid general recssion fears.