UBS analyst Jay Sole reduced the 12‑month price target for Nike Inc. by 13%, setting it at $42 versus the prior $48, while keeping a neutral rating on the stock. The adjustment follows a contraction in Nike's forward price‑to‑earnings multiple to 21 times, down from a five‑year average of 34 times.
UBS projects first‑quarter earnings per share of $0.39, five cents below the Wall Street consensus of $0.44. For the second quarter, the firm expects EPS guidance between $0.31 and $0.43, well under the consensus estimate of $0.53. The full‑year fiscal 2027 EPS estimate was cut by 16% to $1.30, compared with a buy‑side consensus of $1.55.
Regional sales outlooks are also bleak. North America direct‑to‑consumer (DTC) sales are expected to grow only in the mid‑single‑digit percentage range year‑over‑year, missing the consensus expectation of a 0.4% decline. In Greater China, first‑quarter sales are forecast to fall 14.0% YoY, pressured by reduced distributor participation in e‑commerce and a planned cut of more than 1,000 third‑party digital vendors starting in 2027. European DTC sales reportedly declined 22.1% YoY, with Nike losing market share in lifestyle categories to rivals such as On, Hoka and Adidas. Converse, a Nike brand, is projected to see a 30% YoY slump to $256 million.
Options markets are pricing an 8.0% move in Nike's stock around the upcoming earnings release. Short interest has risen to a five‑year peak, representing 6.4% of the equity float. Sole wrote that bearish sentiment may underestimate the impact of the downward EPS revisions on the stock's valuation.
Investors should weigh the lowered earnings expectations, the steep P/E compression and the heightened short‑interest exposure when assessing Nike's valuation and risk profile.
