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.