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Nike stock surge likely to continue, analyst says

March 15, 2012
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NEW YORK—Nike stock has been on a steady rise since October, and that's set to continue, a Sterne Agee analyst said Thursday.

Nike has faced high costs for materials, labor and freight, which it has tried to offset by raising prices, as many consumer goods companies have. In its most recent quarter, net income rose 3 percent as strong demand for its shoes, clothes and gear -- plus higher prices -- offset steep costs.

The company's stock is up 29 percent since Oct. 1. But it can still go higher, as the company introduces new products and costs begin to recede, said Sterne Agee analyst Sam Poser.

Nike, based in Beaverton, Ore., caused a ruckus in February when it released its outer-space theme Foamposite Galaxy sneakers, $220 shoes that glow in the dark. People waiting in line became disorderly in several places. But the shoe was a hit, and Nike has released other new products such as FlyKnit lightweight shoes and Nike apps designed to aid people in cross training and playing basketball.

"Based on our channel checks, we believe the new offerings in calendar 2012 ... will continue to drive unit growth," said Poser.

.In addition some important sports events, like the 2012 Olympics (Nike is not an official sponsor but does sponsor some athletes), the soccer World Cup in 2014 and the Olympic Games in Brazil in 2016, will continue to boost results.

And product costs will continue to fall from peak levels, as cotton prices drop and the company expands its factory capacity.

All these things add up to strong stock, Poser said. He kept a "Buy" rating on the stock.

Shares rose 43 cents to close at $110.73.

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