Expect more near-term challenges for Nike after it reported overstocked inventory levels, according to Argus. Analyst John Staszak downgraded shares of Nike to hold from buy, and lowered estimates, citing the sports apparel giant's most recent quarterly earnings results. Shares dropped more than 10% Friday after Nike reported inventory rose by 44% to $9.7 billion in the fiscal first quarter of 2023. "We believe that Nike will need to cut prices to clear this inventory, which will weigh on margins and earnings in the coming quarters," Staszak wrote in a Monday note. "The company is also facing rising costs and foreign exchange headwinds, as well as weak sales in China." The analyst lowered the FY23 earnings per share estimate to $4 from $4.05. The FY24 estimate was lowered to $4.30 from $4.40. Shares of Nike have come under pressure this year — off 50% this year and nearly 54% off its highs — as the apparel retail giant dealt with global supply chain challenges and Covid-related store closures. Still, "the long-term outlook remains brighter," the analyst said. "Although the industry remains fiercely competitive, we expect the company to build on its dominant position through its globally recognized brand, innovative products, economies of scale, and rapid growth in emerging markets," Staszak wrote. —CNBC's Michael Bloom contributed to this report.