Nike Inc. is highly likely to face a significant drop in profit forecasts and a decline in shares after the release of results for the first quarter of fiscal year 2027, UBS said in an analytical note, highlighting a “negative catalyst” ahead of the report.
UBS analyst Jay Saul cut the 12-month target for shares of the sports footwear giant by 13% — from $48 to $42 — while keeping a “Neutral” rating. The broker expects Nike earnings per share for the first quarter to be $0.39, 5 cents below Wall Street’s consensus forecast of $0.44.
What’s especially important is that UBS is warning that Nike’s management is likely to issue a weak outlook for the second quarter and to revise its expectations for the full 2027 fiscal year downward — even before the November investor day. The broker expects second-quarter earnings per share in the range of $0.31–$0.43, well below the consensus estimate of $0.53.
“Market sentiment is bearish; however, our conversations with investors indicate that the market is underestimating the magnitude of the earnings-per-share forecast cuts, which this report is likely to trigger,” Saul wrote, noting that the options market is pricing in an 8.0% move in the shares around the publication date.
The weakness extends across both direct and wholesale sales channels
UBS tracking data and checks of global distribution channels indicate weakening demand across major product categories and key geographic markets:
Direct sales in North America: growth in sales through the direct-to-consumer (DTC) channel in the U.S. is expected to be down by several percentage points year over year in the first quarter, missing the consensus forecast of -0.4% amid weakening demand for key lifestyle lines, particularly Dunks.
Pressure in Greater China: sales in the Greater China region are forecast to fall 14.0% year over year in the first quarter. The sales trend is worsening due to reduced distributor participation in e-commerce, high inventory levels, and a planned reduction of more than 1,000 third-party digital sellers starting in 2027.
Weakness in Europe: Nike’s direct sales in Europe fell 22.1% year over year in the first quarter based on transaction data, and checks of specialty retail suggest Nike is losing market share in the lifestyle segment to more flexible competitors such as On, Hoka, and Adidas.
Converse decline: Converse sales are expected to plunge 30% year over year to $256 million.
Bearish positions in the market hit a peak
The warning comes amid a new five-year high in short positions in Nike shares — 6.4% of shares outstanding. UBS quantitative data on short-position concentration shows Nike is heavily shorted relative to both its peers and historical averages.
Nike’s forward price-to-earnings ratio has fallen to 21x from the five-year average of 34x. UBS cut its earnings-per-share forecast for the full 2027 fiscal year by 16% to $1.30, while the buyer consensus forecast stands at $1.55.