11:19 AM EDT, 05/20/2025 (MT Newswires) -- Nike ( NKE ) is still going through the "heavy lifting stage" of inventory clearance while gearing up for what is expected to be a "strong" Autumn/Winter 2025 running product launch, RBC said in a note Tuesday.

The analysts said that the recent leadership changes suggest progress in strengthening executive oversight. However, heading into fiscal year 2025 earnings, the risk/reward looks unfavorable due to ongoing clearance activity, potential tariff impacts, and broader economic uncertainty. "We prefer to wait until marketplace inventories are cleaner and Nike's ( NKE ) revenue growth improves towards flattish (likely 2H26E)."

For the fourth quarter, the analysts said they expect Nike ( NKE ) to report $10.6 billion in revenue, down 16% year over year, with a gross margin of 40.5%, down 420 basis points on year. They estimate earnings before interest and taxes at $251 million and earnings per share at $0.13. Inventory is expected to be $7.1 billion, down 6% year over year, and free cash flow of $1.1 billion.

The analysts added that they don't think Nike ( NKE ) will issue fiscal 2026 guidance due to ongoing tariff uncertainty. For fiscal Q1, the analysts are expecting a revenue decline in the double digits, gross margin to fall by 2.75 to 3.25 percentage points year-over-year, and selling, general, and administrative expenses to drop 3% year-over-year, with flat demand creation. Their EBIT forecast of $571 million is 13% below current consensus estimates.

RBC adjusted its price target on Nike ( NKE ) to $65 from $66 while keeping its sector perform rating.

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