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Citi upgrades Nike to Buy on margin recovery in 2024

Citi analyst Paul Lejuez upgraded Nike to Buy from Neutral with a price target of $135, up from $100. While the company’s sales challenges remain, Citi is more optimistic about Nike’s ability to “protect” earnings in fiscal 2024 and 2025 despite a “choppy” macro environment, the analyst tells investors in a research note. The firm sees a gross margin recovery starting in Q2 of 2024 through 2025 from leaner inventory, lower promotions and direct-to-consumer benefits. Nike also has a new innovation calendar in 2024 ahead of the Paris Olympics and a solid position in China, says Citi. It sees a favorable risk/reward at current share levels.

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