Nike Runs Up After Earnings Beat, Under Armour Upgraded On Read-Through

NEW YORK (TheStreet) -- Shares of Nike (NKE) are climbing after the company reported stronger than expected results and provided better than expected profit guidance. Following last night's report, a number of analysts reacted positively in notes this morning.

WHAT'S NEW: Nike reported first quarter earnings per share of $1.09, versus analysts' consensus estimate of 88c. The company's revenue was slightly ahead of the consensus outlook. The footwear maker said that its futures orders had jumped 11% during the quarter, or 14% excluding currency impacts. Nike predicted that its profits would rise 20% this year, versus analysts' consensus estimate of a 14% advance. Additionally, Nike predicted that its gross margin would rise 1.25 percentage points in fiscal 2015. "Fiscal year 2015 is off to a strong start," said Nike CEO Mike Parker, adding that Nike has "never been better positioned to realize our tremendous growth potential."

ANALYST REACTION: In a note to investors, Janney Capital analyst Eric Tracy responded to the company's results and guidance by upgrading the shares to Buy from Neutral. One of the reasons Tracy cited for the upgrade was his belief that the company has many way of increasing its profitability as its profit margins rise. Over the longer term the company's profits should jump as a result of advances in manufacturing and supply chain processes, added Tracy. He raised his fair value estimate on the stock to $93 from $80. Meanwhile, JPMorgan raised its price target on the stock to $100 from $80, Stifel hiked its price target to $100 from $89, Citigroup increased its price target to $93 from $92 and UBS raised its price target to $96 from $90. All of the firms named kept "Buy" or an equivalent rating on the stock.

WHAT'S NOTABLE: Deutsche Bank upgraded Under Armour (UA) to Buy from Hold this morning, citing continued sector strength following Nike's better than expected Q1 results. The firm raised its price target on shares of Under Armour to $78 from $60 in conjunction with the ratings change.

PRICE ACTION: In early trading, Nike rose 10.5% to $88.15 and Under Armour gained 3.4% to $69.82. Foot Locker (FL) , which sells products from both companies, advanced 3%, but sneaker retailing peer Finish Line fell 10% after its own disappointing quarterly results.

Reporting by Larry Ramer.

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