(Reuters) - Shares in Nike surged 4 percent on Friday as at least eight Wall Street analysts raised their targets on the sneaker maker, judging better than expected forecasts signaled the beginning of the end of a year-long rough patch in North America.
Just five months ago, Wall Street analysts warned that Nike’s recovery in its home markets would be a long one as German rival Adidas (ADSGn.DE) launched a raft of new shoes and marketed hard.
The bankruptcies of sporting goods retailers and Nike customers Sports Authority and Sports Chalet also hurt the Oregon-based firm that sponsors LeBron James and a slew of other major global stars.
On Thursday, Nike’s Chief Executive Mark Parker said the company was seeing “a significant reversal of trend in North America,” as new offerings like Air VaporMax were lapped up by customers and online sales steamed ahead.
After its third quarter results showed a 6 percent drop in revenue in the region, Nike said it expects revenue to be flat in the current quarter and to grow in the first half of the next fiscal year.
“Key initiatives designed to reignite Nike’s growth in (North America) and around the globe are gaining traction and were evident in its (third quarter) results that beat across all lines,” Wedbush analysts said while raising their price target for the company by $1 to $75.
Nike now has 41 products in the Top 60 selling shoes, up from 26 in November of last year, according to brokerage Jefferies.
In contrast, Adidas had 34 in November 2017 and was now down to 18.
“Nike U.S. is back in business,” Jefferies analysts said.
Channel checks by the brokerage also showed that retro styles were back in favor in the quarter, and Nike was likely to have benefited the most thanks to its iconic Jordan brand.
Nike’s shares were the biggest gainers among Dow Industrial Average stocks. The stock has a median price target of $74 against just over $66 on Friday.
Analysts from a handful of other houses were more skeptical.
“While this sounds very positive, we (and the Street) had been expecting North America to return to growth in the fourth quarter (of low single digits) versus guidance of 0 percent which seems to deflate the excitement somewhat,” Canaccord Genuity analyst Camilo Lyon said.
Reporting by Uday Sampath in Bengaluru