Nike's (NKE) downward earnings-per-share revision cycle could persist and a rebound could take longer than expected, UBS Securities said in a Thursday note.

The market may be underestimating the negative impacts of Nike's discount reductions on unit demand; the reset of its sportswear and Jordan businesses on sales; and slowing sales on margins, the brokerage said.

A pullback on promotions could lead to a substantial decline in Nike's fiscal 2028 revenue, which also remains at risk from shifting fashion trends and the company's slowing brand momentum, UBS noted. Nike's management already expects the reset of its Jordan and Greater China businesses to weigh on fiscal 2027 to 2028 revenue, the investment firm added.

UBS cut its fiscal 2027 and 2028 revenue estimate for Nike to $42.79 billion and $43.83 billion, respectively.

UBS has a neutral rating on Nike, and cut its price target to $34 from $42.

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