01:05 PM EST, 12/20/2024 (MT Newswires) -- Nike ( NKE ) CEO Elliott Hill is actively reducing the company's inventory to "clear the way" for product innovation including actions that are causing a "temporary and steep drop in earnings," BofA Securities said in a note Friday.

The new leadership is focusing on key priorities including returning to sport-focused products, accelerating innovation, increasing investments in the brand, clearing excess products swiftly, presenting premium products, and maintaining a strong wholesale presence, according to the note.

BofA said it is lowering earnings projections for fiscal 2025 and 2026 due to lower sales, reduced gross margin from clearance actions and continued brand investment.

"We expect the initiatives to continue into H1 2026, with an H2 2026 sales inflection," the firm added.

BofA reduced its price target to $90 from $95 and reiterated a buy rating on the stock.

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