UBS has downgraded H&M's stock rating to Neutral from Buy, citing weaker-than-expected sales and EBIT margin volatility, indicating a longer turnaround period for the retailer. The forecasted normalized gross margin for fiscal year 2027 has been reduced from 54% to 53%, with the EBIT margin lowered from 10% to 8.3%. Additionally, EPS estimates for fiscal years 2025 and 2026 have been cut by 12% and 19%, respectively, as tactical promotions and external challenges impact gross margins.