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Nike (NKE) is expected to report results on its fiscal third quarter on Thursday, March 20, with a conference call scheduled for 5:00 pm EDT. What to watch for: 

GUIDANCE: In December, Nike forecast third quarter revenue down low-double digits, with gross margin down 300-350 basis points. The company commented that Nike has become "far too promotional," and that it would shift Nike digital to a full-price model. New President and CEO Elliott Hill commented that "We're taking immediate action to reposition our business, so we can get back to driving long-term shareholder value. Our team is ready to go, and I'm confident you will see more moments of NIKE being NIKE again."

Morgan Stanley sees room for Q3 EPS upside and for Q4 EPS guidance to be set in-line-to-above the Street, which it calls a "nice" near-term set-up, but also one that appears reflected in the stock's year-to-date outperformance. However, in the firm's fiscal Q3 preview the analyst cautioned risk to FY26 numbers and a "still-high valuation" as cooling this near-term optimism. In its own research note to investors ahead of the earnings report, BofA said it expects Nike management may provide some context for the expected fiscal 2026 margin recovery, but "would be surprised" if explicit FY26 earnings guidance is communicated. In the near-term, BofA still expects sales and margins to be more severely impacted in Q4 relative to Q3. BofA also argued that Q3 results will "matter less" than the message about where we are in the product reset cycle and evidence that new product is resonating.

TURNAROUND TO TAKE LONGER: In December, Telsey Advisory downgraded Nike to Market Perform from Outperform with a price target of $80, down from $93. The firm came away from Nike's fiscal Q2 earnings call, the first one led by new CEO Elliott Hill, still seeing a path for a turnaround at the company, but one that will take longer to execute, require greater investments in areas like brand marketing, and result in lower sales and profitability over the next 12 months.

Meanwhile, Morgan Stanleytold investors ahead of the Q3 report that it expects any potential Nike turnaround as "a ways off," 2026E at the soonest. The firm added that Lululemon (LULU) and Asics (ASCCF) are most at risk if Nike triumphs in its turnaround.

'WEAK' DEMAND TRENDS: TD Cowen said that while "encouraged" by the firm's promotional tracker within North America showing improvement and franchise management within running, demand trends remain weak into spring. UBS analyst Jay Sole says the firm's channel checks suggest Nike's global sales growth trends "deteriorated" over the last three months. UBS expects Nike to deliver "just an in-line" Q3 earnings result and give an implied Q4 earnings per share outlook in the range of 22c-34c, bracketing the sell-side's 29c view. However, the firm sees risk that Nike's fiscal 2026 commentary could be meaningfully below expectations, causing Street earnings estimates to fall and market sentiment to weaken.

Goldman Sachs reduced its FY26 EPS view by 17c to $2.16 and its FY27 view by 15c to $2.92 to reflect updated foreign exchange, recent moderation in traffic trends across the industry in early 2025, and its expectation for weaker gross margins as a result of more persistent channel and product mix shift into FY26. There are some some signs for optimism, including strong engagement with recent tentpole marketing campaigns, some normalization in industry promotional levels in early 2025, and healthier commentary regarding new product innovations such as the Pegasus Premium, but it is still early in Nike's turnaround journey and the firm has yet to see material signs of brand heat improvement, Goldman Sachs added.

'V-SHAPED' RECOVERY: Jefferies upgraded Nike to Buy in late February, saying the company's new CEO is tackling product and distribution issues "head-on, positioning the brand to again outgrow the market and take back lost share." The firm said its survey work shows that Nike's brand remains very strong, proving its issues were self-inflicted and competitive threats are "less severe." Jefferies sees a "V-shaped" earnings and margin recovery in fiscal 2027 for Nike, well ahead of consensus estimates, which should drive the stock's valuation much higher from current levels. BMO Capital said Nike's challenges today parallel what it faced in 2015 to 2018 during its run-in with adidas (ADDYY) when demand creation was muted and inventory ballooned, and as such, BMO has conviction Nike "can use its past as playbook for the future."

Earlier in the month, Citi said it no longer believes fiscal 2026 will inflect the way it hoped, either on the sales or EBIT margin line. Nike's sales pressures seem likely to continue as it manages down key franchises further in fiscal 2026, without enough new product at scale to "fill the void," the analyst told investors in a research note.

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