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A pedestrian walks past an advertisement for Nike in Mumbai, India.
Nike shares will surge as its North American sales begin to grow again later this year after new products are introduced, according to one Wall Street firm.
Wedbush Securities raised its rating on Nike shares to outperform from neutral.
“We are increasingly confident the pricing pressure on Nike footwear is subsiding as comparisons begin to ease,” analyst Christopher Svezia wrote in a note to clients Friday. “While we expect some distribution pressure in North America, Nike can still generate sales growth in the region during FY19 against that backdrop.”
Nike shares rose 3.3 percent Friday following the upgrade.
Svezia raised his price target to $74 from $57. The new target is 15 percent higher than Thursday’s closing price.
The analyst said his conversations with footwear retailers revealed optimism over the company’s upcoming products and international sales opportunity this year. Many of the new shoes expected to be introduced in the next three to six months are casual or hearken back to classic Nike styles.
Nike is also set to introduce a shoe designed in collaboration with the rapper Kendrick Lamar, who could even be wearing them during a performance at the Grammy awards later this month.
As a result, the analyst predicts Nike’s North American sales will return to growth by the May quarter this year, boosting fiscal year 2019 results.
Nike has slightly underperformed the market in the previous 12 months. Its shares are up 21 percent through Thursday compared to the S&P 500’s 24 percent gain.
— CNBC’s Michael Bloom contributed to this story.
