Nike reporting a solid quarter with strong sales in both the U.S. and China. But if you dig deeper the story isn't as pretty, says Cowen analyst John Kernan. He joined the "Halftime Report" traders to explain why he thinks Nike's numbers are a "bad omen" for the retail sector.
Kernan is already looking ahead to next quarter. He points out that Nike stock was up this morning until the company gave its Q3 guidance and noted a potential decline in gross margins.This, in turn, will have an effect on the retailers that carry the brand. While many traded up today, the longterm might be a different story. According to Kernan, "if Nike's feeling gross margin pressure you can bet a lot of these retailers will feel a multiple of that."
So what do our experts say?
Jon Najarian remains bullish arguing that Nike is a stock you should hold given its solid earnings. He added Nike to his Halftime Portfolio yesterday during the show.
Josh Brown notes that while the numbers were strong, the Street has already priced in the positive sentiment.
While today's price action concerns Joe Terranova, he remains bullish on the name.