Bank of America Securities released a research report stating that Nike (NKE.US) new CEO Elliott Hill is taking quick actions to reduce inventory within his first 60 days in office to provide room for future innovative products. The firm believes this is the right strategy and will lead to a healthier Business. The firm reiterated its "Buy" rating for the company, lowering the Target Price from $95 to $90, while also revising the earnings per share forecast for the fiscal years 2025 and 2026 down to $2 and $2.34 respectively, to reflect reduced sales and gross margin forecasts, as well as ongoing investments in the brand. The firm anticipates these new initiatives will continue until the first half of 2026, with a sales inflection point expected in the second half of 2026. The firm has lowered its earnings per share estimate for fiscal year 2027 to $3.13, reflecting a downward adjustment in sales forecasts, but the comparative base has declined, and EBIT profit margins are expected to rebound to 11.5%.

The firm stated that Nike's management's guidance for the third fiscal quarter ending February next year indicates sales could decline by double digits, with gross margin contracting by 300 to 350 basis points, and expects sales, gross margin, and administrative and sales expenses for the fourth fiscal quarter, ending in May next year, will deteriorate quarter on quarter. However, the report suggests that management still believes the company can achieve a double-digit profit margin.