SKN | UBS Reiterates Neutral Rating on Nike as Brand Signals Improve

Nike remains in a transitional phase, according to UBS, which has reaffirmed its Neutral rating on the sportswear giant with a $62 price target. The target sits close to Nike’s current share price of around $60, implying limited upside in the near term despite early signs of brand stabilization.

Brand Strength Shows Early Signs of Recovery

UBS’s assessment follows insights from its 11th global sportswear survey, which suggests that Nike’s brand health is improving year over year. While the recovery is still in its early stages, UBS views the strengthening brand perception as a potential foundation for a longer-term turnaround. This would be significant for investors, given that Nike shares have fallen more than 20 percent over the past year.

A key factor behind the improving sentiment is Nike’s renewed emphasis on wholesale distribution under CEO Elliott Hill. The strategy marks a shift from the company’s earlier focus on direct-to-consumer channels. Survey respondents increasingly report that Nike products are easier to find both in physical stores and online, reversing a multi-year decline in availability perceptions seen between 2019 and 2022.

Re-Engaging Consumers Through Core Sports Identity

The survey also highlights progress in Nike’s effort to reconnect with its roots in athletic performance. The share of consumers who associate Nike with being “good for doing sports” has climbed back to its 2019 peak level, suggesting that the brand’s refocus on sport is resonating with customers.

UBS attributes this improvement directly to leadership changes and a clearer product and marketing strategy. However, the bank cautions that stronger brand metrics do not automatically translate into faster financial recovery, particularly given ongoing operational and regional challenges.

Financial Headwinds Remain

Despite improved brand indicators, Nike’s financial performance remains under pressure. Revenue declined 5.03 percent over the past twelve months, reaching $46.51 billion. At the same time, the stock is trading at a price-to-earnings ratio of about 35, indicating that investors are already pricing in a recovery that has yet to fully materialize.

Other analysts remain divided. While some firms see long-term potential, several have trimmed their price targets, citing slower-than-expected inventory normalization and continued weakness in China. UBS itself recently lowered its target, arguing that the turnaround will require more time to translate brand momentum into sustainable earnings growth.

Outlook: Patience Still Required

UBS’s Neutral stance reflects a balance between improving brand fundamentals and lingering financial risks. Nike’s renewed wholesale presence and clearer sports focus are encouraging, but meaningful upside will likely depend on stabilizing revenues and navigating regional headwinds.

For investors, the message is one of caution rather than pessimism: Nike’s brand appears to be regaining traction, but a full recovery remains a medium-term story rather than an immediate catalyst.

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