01:49 PM EDT, 09/23/2025 (MT Newswires) -- Nike's ( NKE ) fiscal first-quarter profit is expected to be in line with Wall Street's expectations, with margin headwinds likely to offset a potential revenue upside, Morgan Stanley said in a note e-mailed Tuesday.

The athletic footwear and apparel maker is scheduled to release its results next Tuesday.

For the fiscal first quarter, Nike ( NKE ) projected in June that revenue would decline by a mid-single digit, with gross margin expected to drop by 350 basis points to 425 basis points, Chief Financial Officer Matthew Friend said on an earnings call, according to a FactSet transcript.

Morgan Stanley lowered its projected earnings estimate to $0.27 per share from $0.29. Analysts polled by FactSet expect adjusted EPS of $0.27. The brokerage sees a revenue decline within the company's guided range.

"While we think the quarter will land in line on EPS, we note that fundamentals likely remain challenged in aggregate," Morgan Stanley said. "But this will likely be mostly overlooked given the market is well aware that 'Win Now' strategic actions are slated to impact fiscal (2026 first half) more acutely, and focus will be on go-forward commentary."

Morgan Stanley expects Nike ( NKE ) to guide second-quarter EPS below analysts' projections amid continuing margin pressures. The investment bank said the company could guide earnings in the range of $0.30 to $0.50 per share. Analysts polled by FactSet are looking for $0.50 on revenue of $11.98 billion, compared with year-ago EPS of $0.78 and sales of $12.35 billion.

Nike ( NKE ) could guide second-quarter sales to fall by a low- to mid-single digit, in line with consensus estimates, Morgan Stanley said.

While the investment bank does not expect Nike ( NKE ) to reintroduce its full-year guidance, it said the Street's estimates for the second half and fiscal 2026 remain "too high."

"This, coupled with our less constructive recent channel checks and still-elevated valuation, leaves us more negative on our equal-weight rating," Morgan Stanley said, though it raised the price target on Nike ( NKE ) shares to $70 from $64.

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