UBS Group published a research report indicating that Nike (NKE.US) may still have more negative news in the coming quarters, thus there is a significant risk of downward adjustment. However, the bank believes that Nike has the ability to rebound in the long run, so it maintains a "neutral" rating with the Target Price lowered from $80 to $73.

UBS Group has reduced its earnings per share estimates for Nike for the fiscal years 2025 to 2027 by 15%, 23%, and 16% respectively, to $2.05, $2.20, and $2.90. This is due to the belief that the group must take more actions than originally expected to reduce inventory, along with new CEO Elliott Hill proposing to change the group strategy towards high-endization, while still half of the group's products are on discount, thus the prospects for brand status recovery remain unclear. As for the gross margin, the bank believes that the group's adjustments in inventory size and the restoration of full-price sales should ultimately help its gross margin. However, weak sales growth, combined with the group's need to reinvest in products, marketing, and talent, will lead to huge costs that will de-leverage.