UBS Sticks with Neutral Rating on Nike Amid Jordan Brand Concerns
UBS has maintained its Neutral rating on Nike Inc. (NYSE:NKE), citing concerns about the company's Jordan brand and valuation. The firm believes that negative factors are not fully reflected in the current stock price, which it sees as unattractive for investors. Currently, Nike trades at approximately 25 times UBS' fiscal 2027 earnings per share estimate.
The firm notes that this multiple suggests the market has already priced in a substantial recovery, and it does not view the current level as an entry point for investors. According to InvestingPro analysis, the stock appears undervalued with a Fair Value of $56.19, suggesting potential upside that contrasts with UBS's cautious stance.
The firm sees balanced risk between upside and downside scenarios, with upside potential existing if Nike returns to positive sales growth with expanding gross margins sooner than anticipated. Downside risk remains if the company's recovery takes longer than the market expects. Recent actions involving Nike's Jordan brand have reinforced UBS's current stance on the stock.