Investing.com - Jefferies maintained its Buy rating and $115.00 price target on Nike (NYSE: NKE ) despite expectations for a difficult fiscal fourth quarter report.

The firm anticipates Nike’s upcoming results will show significant pressure, with revenue projected to decline in the teens and gross margin down 400-500 basis points as the company works through excess inventory. Jefferies models operating margins dropping approximately 1,050 basis points and earnings per share falling roughly 85% year-over-year.

Despite these near-term challenges, Jefferies cites several positive indicators supporting its bullish stance. Nike’s foot traffic accelerated over the past three months, growing 4.1% in May compared to 2.7% in April and 0.5% in March, suggesting the company’s inventory clearance efforts through factory stores are showing results.

The firm also highlights Nike’s product innovation strength, particularly in running with the Vomero and Pegasus styles, which lead in average monthly search volume. Inventory declined 2% in the previous quarter, counter to industry trends, as Nike makes room for new products.

Jefferies notes Nike’s wholesale strategy reset under CEO Elliott Hill is strengthening relationships with key partners including Dick’s Sporting Goods (NYSE: DKS ) and Academy Sports, while the return to Amazon (NASDAQ: AMZN ) expands the brand’s reach further.

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