Nike (NKE) investors should "remain on the sidelines" as visibility into a potential recovery is "limited," Truist Securities said in a review of the company's fiscal Q1 results that forecast full-year earnings below market expectations.

Late Thursday, Nike reported fiscal Q1 earnings of $0.48 per diluted share, down from $0.49 a year earlier. Analysts polled by FactSet expected $0.43. Revenue in the three months ended Aug. 31 fell to $11.21 billion from $11.72 billion a year earlier. Analysts expected $11.32 billion.

Nike forecast fiscal 2027 adjusted EPS at $1.15 to $1.35, missing expectations for $1.68. It also expects fiscal 2027 sales will likely decline by high single digits.

While management previously expected a sequential improvement in H2 for Nike Sportswear and Jordan, it now anticipates pressure on these segments will persist through the current and next financial years, Truist Securities analysts, including Scot Ciccarelli, said in a note.

While the company did not break down guidance by region, its outlook "assumes pressure on China continues to build, and mgmt is forecasting revenue declines in the region to steepen for the year," the analysts said.

Meanwhile, Nike said it expects its Pace initiative, an operational and supply chain restructuring plan, will generate about $2.5 billion in cumulative savings through fiscal 2031,

It aims to accelerate its Sport Offense by modernizing its global supply chain, establishing a new India campus, realigning operations into three geographies, and streamlining the organization to reduce costs.

With "significant wood left to chop across multiple fronts, still-growing competitive pressures, and a choppy macro," the analysts said visibility into a potential recovery is "limited."

Truist cut its price target to $29 from $42 and maintained its hold rating on the stock.