UBS and BTIG analysts reduced their price targets on Nike, Inc. ahead of the company’s fiscal third-quarter report amid concerns about the timing of Nike’s sales recovery.
Nike is scheduled to report results for the fiscal third quarter ended February 28 on March 31.
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Jay Sole, managing director at UPS, trimmed his price target to $58 from $62. He kept his “Neutral” rating on the stock.
Sole wrote in a note issued on Thursday, March 19, that his team’s channel checks suggest Nike had “lackluster global sales momentum” through March month-to-date. As a result, UBS expects Nike to deliver fiscal third-quarter results about in line with estimates and to provide an implied fourth-quarter outlook of about 18 cents, below analysts’ consensus of 23 cents. Sole added, “Importantly, we don’t anticipate Nike’s 4Q outlook to signal a meaningful q/q improvement for its sales growth trend.”
UBS expects Nike to guide fourth-quarter sales to decline in the low single digits on a currency-neutral basis, with UBS estimating Nike’s third-quarter sales were down 3 percent. Sole also does not expect Nike to provide initial FY27 commentary, following the pattern in recent quarters. The analyst wrote, “We believe the market expects a similar outcome and thus doubt NKE’s 3Q report impacts the stock’s P/E much.”
Sole also noted that investors have become more bearish on Nike’s recovery prospects, with the stock down 19 percent over the last three months. Sole wrote, “We are hearing concerns that Nike’s turnaround in China and for the Converse brand are taking longer than previously thought. Plus, some inventors are cautious about Nike’s ability to sustain momentum in running.”
UBS lowered the P/E multiple used to value Nike from 29x to 27x, given its view that Nike’s turnaround is taking longer than expected.
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Robert Drbul, managing director and consumer retail analyst at BTIG, in a note Thursday, March 19, lowered his price target on Nike to $90 from $100. Drbul also reduced his fiscal 2027 estimate for Nike to $2.50 from $2.70, reflecting likely higher marketing investments around the upcoming World Cup and the cost implications of recent oil price increases.
However, the analyst kept his “Buy” rating on Nike. Drbul wrote, “While the top-line profile still looks muted, we see incremental underlying progress, particularly in North America and with the Sport Offense.”
He also called out signs of the “early momentum” within Nike’s innovation pipeline and storytelling, citing ACG, NikeSkims and basketball drops, especially Kobe models. Drbul said, “Some categories may not be large enough near-term to move the consolidated revenue needle, but we view the directionally improving product energy as an important signal that the ‘Sport Offense’ framework is taking hold, with momentum continuing with Running, but expanding to soccer, basketball and tennis/golf.”
Drbul said recent news of corporate workforce reductions at Converse, layoffs at two Nike facilities in Memphis, TN, as it consolidates distribution centers, and leadership changes, including in China, “reinforces to us that Nike is prioritizing speed, accountability and efficiency, which should all aid margin recovery.” He cited the World Cup and, eventually, the Los Angeles Olympics in 2028 as catalysts for reviving top-line growth.
Drbul wrote, “Despite our earnings revision, at current levels, we continue to see a compelling risk/reward ratio. While shares continue to lag, we note a very strong financial condition along with its 3 percent dividend yield.”
Shares of Nike closed on Thursday, March 19, at $53.44, down from $63.71 at the start of the year. Shares had traded as high as $90.62 in September 2024 after Nike announced the hiring of Elliot Hill as CEO.
Image courtesy Nike ACG
