Shares of Nike Inc. ran up 2.3% in premarket trade Thursday, after the athletic apparel and accessories giant was upgraded at Morgan Stanley, which said headwinds and competitive pressures were waning. Analyst Jay Sole raised his rating to overweight from equal weight and his stock price target to $68, which is 18% above Wednesday's closing price of $57.77, from $54. Sole said he has "increased conviction" in the company's ability to grow North America sales to 5%, from the current decline of 2%, by mid-fiscal 2018. He said Nike's supply chain benefits should accelerate over the medium term and that its operating model has competitive moats. "The opportunity to buy [Nike's stock] at the bottom of a cycle is closing," Sole wrote in a note to clients, with peers unable to emulate Nike's operating model. The stock has fallied 13.7% year to date through Wednesday, while rival Under Armour Inc. shares have tumbled 29.5%, the SPDR Consumer Discretionary Select Sector ETF has climbed 12.1% and the Dow Jones Industrial Average has gained 9.5%.
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