UBS analyst warns Nike stock may remain under pressure despite steep pullback

Nike Inc. is at risk of meaningful earnings reductions and further share-price weakness when it releases first-quarter fiscal 2027 results, UBS said in a research note that pointed to a “negative catalyst” before the report.

UBS analyst Jay Sole cut his 12-month price target on the footwear maker by 13%, to $42 from $48, while keeping a Neutral rating. The firm forecasts Nike’s first-quarter EPS at $0.39, five cents under the $0.44 Wall Street consensus.

More significantly, UBS cautioned that Nike’s management will probably provide soft second-quarter guidance and lower full-year fiscal 2027 expectations before its November investor day. The brokerage sees second-quarter EPS guidance of $0.31 to $0.43, far below the $0.53 consensus estimate.

“Sentiment is bearish, yet our conversations with investors suggest the market underestimates the magnitude of the downward EPS revisions this print is likely to cause,” Sole wrote, adding that options markets imply an 8.0% move in the stock around the release.

Weakness is broad across direct and wholesale channels

UBS tracking data and global channel checks show demand trends worsening across major product categories and key geographies:

North America Direct-to-Consumer: First-quarter U.S. DTC sales growth is expected to decline by a mid-single-digit percentage year over year, falling short of the consensus forecast of -0.4%, as core lifestyle franchises such as Dunks retreat.

Greater China Pressure: Greater China first-quarter sales are projected to fall 14.0% year over year. The trend reflects lower distributor participation in e-commerce, high inventory levels, and a planned cut of more than 1,000 third-party digital vendors beginning in 2027.

European Softness: European DTC sales fell 22.1% year over year in the first quarter based on transaction data, while specialty retail checks suggest Nike is ceding market share in lifestyle categories to nimbler rivals including On, Hoka, and Adidas.

Converse Decline: Converse sales are expected to drop 30% year over year to $256 million.

Bearish market positioning hits a peak

The caution comes as short interest in Nike has climbed to a five-year high of 6.4% of its equity float. UBS quantitative crowding data indicates Nike is heavily short-crowded compared with peers and its own historical averages.

Nike’s forward price-to-earnings multiple has fallen to 21x from a five-year average of 34x. UBS lowered its full-year fiscal 2027 EPS estimate by 16%, to $1.30, versus a buy-side consensus expectation of $1.55.