Consumer Discretionary

Nike (NKE) is taking the right steps to improve its performance after its fiscal Q3 results pointed to challenging business fundamentals, UBS said in a note on Friday. The report said Nike is making changes that include bringing back the category offense and focus on sports, adjusting its DTC strategy and ramping marketing spend. “These changes are the right steps and will cause Nike’s business to inflect over the NTM, driving P/E expansion and stock outperformance,” said UBS analysts, including Jay Sole. UBS kept its buy rating while cutting its price target to $125 from $138. The analysts also said Nike’s brand image is still looking to regain momentum as its top selling shoes are not resonating with consumers as well as they once did. “Nike needs to add much more newness to its assortment to drive growth,” they said.

UBS says Nike’s 3Q was “disappointing” and shows business fundamentals remain challenging, but that restructuring changes should help the business inflect over the near term. The analysts say in a research note that Nike is taking the right steps, but it needs to add much more newness to its assortment to drive growth, as its top selling shoes are not resonating with consumers as well as they once did. UBS lowers its FY25 and FY26 sales estimates by 2.5% and 2.1%, respectively, and cuts its target price to $125 to $138. Shares slide 6% to $94.69.

Baird analyst Jonathan Komp maintains Nike (NYSE:NKE) with a Outperform and lowers the price target from $140 to $125.

Nike is partnering with the German Football Federation, replacing Adidas, who has been the federation’s sponsor for decades. The sneaker and apparel company has been awarded with this key contract, starting in 2027, CEO John Donahoe says on a call with analysts following the company’s latest results. “It was remarkable team effort and a great proof point that when Nike brings out our best, no one can beat us,” Donahoe says. The company didn’t disclose financial details of the deal. Shares drop 5.8% to $95.