Analysts at Citigroup (C) have upgraded the stock of sneaker giant Nike (NKE) ahead of its upcoming earnings report that’s scheduled for Dec. 21.
Specifically, Citigroup upgraded Nike’s stock to a “buy” rating from “neutral” previously, and raised its price target on the shares to $135 U.S. from $110 U.S.
Citigroup analyst Paul Lejuez said he is increasingly confident in the future of Nike as its China business rebounds and its inventories normalize following the Covid-19 pandemic.
Other tailwinds that Lejuez sees for the sneaker and athletic apparel maker include lower freight costs, growth in the company’s direct to consumer strategy, and improving gross margins.
He also expects Nike’s sales to get a boost in 2024 from its product line that’s been created for the Paris Olympics and the U.S. Olympic team.
Citigroup added that it conducted a quarterly survey of 1,000 Chinese consumers and 1,600 North American consumers to gauge momentum of the Nike brand and the results were positive.
Nike and its stock have struggled coming out of the pandemic due to issues that have included bloated inventories, slowing sales in China, and production problems in Southeast Asia.
Citigroup said it sees most of those issues being resolved in the year ahead.
Nike’s stock is flat in 2023 (down 0.12%) and currently trades at $118.61 U.S. per share.
