Nike (NKE) is scheduled to report results of its second fiscal quarter after the market close on December 20, with a conference call scheduled for 5:00 pm ET. What to watch for:

GUIDANCE: In September, Nike forecast Q2 revenue up in the low double digits, with gross margins declining 350-400bps versus the prior year, "the largest impact across the fiscal year as we discount out-of-season product more aggressively in a largely promotional marketplace." Nike said this would require higher markdowns in its own channels and through wholesale partners. Analysts are currently calling for Q2 revenue of $12.57B.  

Baird analyst Jonathan Komp expects Nike to reach Q2 estimates and view embedded slower 2H multi-year revenue growth assumptions as it is relatively de-risked.

BUSINESSES 'AT OR PAST TROUGH': Credit Suisse analyst Michael Binetti said that Nike's two most important businesses are "at or past their trough," and EPS revisions are "more likely to the upside from here." However, he believes Nike will have to calm concerns that heavy inventories won't pressure U.S. revenues in the second half of the year. Binetti concludes that Nike is a "must-own discretionary stock for high quality exposure to what should be the most powerful global consumer story over the next year -- China reopening."

30-DAY POSITIVE CATALYST WATCH: Citi analyst Paul Lejuez opened a "30-day positive Catalyst Watch" on Nike on December 13. He expects the company's Q2 results on December 20 will beat consensus based on stronger sales and margins. While Nike and its retail partners were highly promotional in Q2, consumers responded well and the company made significant progress working through excess inventory, Lejuez tells investors in a research note. He also believes newness in footwear drove strong full-priced demand. He leans more positive on a better inventory position and outlook in China.

'SLIGHTLY BEAT': Morgan Stanley analyst Alex Straton thinks Nike's Q2 report could "slightly beat Street forecasts" given stronger-than-expected topline results from global brands such as Capri Holdings (CPRI), Tapestry (TPR) and On Holding (ONON) and encouraging intra-quarter commentary, primarily from Skechers (SKX). Straton added that the setup for 2023 "remains attractive."

CRACKDOWN ON SHOE RESELLING: In an effort to crack down on sneaker-buying bots, Nike said it would cancel orders placed with automated ordering software or technology on its website or apps, The Wall Street Journal reported in October. According to the revised rules posted on Nike's website, the company could charge restocking fees, decline to issue refunds, or suspend the accounts of users it determines are buying with the intent to sell, the Journal wrote.

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