Sep 30, 2009
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NBA season, World Cup to boost Nike sales

Sep 30, 2009

Sept 30 (Reuters) - Nike Inc (NKE.N) stands to benefit from the upcoming NBA season in the United States and the football World Cup in South Africa as sales get a boost, said Goldman Sachs, which upgraded the stock to "buy" from "neutral".

The company's shares, which have risen 26 percent over the past six months, jumped 7 percent to $64.11 in trading before the bell. They closed Tuesday 29 September at $60.09 on the New York Stock Exchange.

The brokerage said it sees U.S. sales at the basketball category likely reaccelerating, driven by recent success of some of the National Basketball Association's (NBA) stars, who are reigniting prominence of the sport.

"Since the Michael Jordan years, there had been a dearth of leading NBA players with broad star appeal," analyst Michelle Tan said. "However, that changed beginning in 2008 with the success of Kobe Bryant and the Lakers and the ongoing rise of LeBron James."

Sales in the basketball category is expected to pick up for the athletic shoe and apparel maker as the NBA season gets underway in October, driving an improvement in overall U.S. sales, the analyst said.

Data shows 21 new basketball shoe launches for Nike over the May to June 2008 period, up from 14 a year earlier, the analyst noted, adding that these launches included hot selling styles like NIKE Zoom Sharkley, Jordan AJF3 and Air Jordan VI Olympic.

As was witnessed in 2006, football World Cup 2010 in June should drive sales acceleration in Europe, analyst Tan said.

"Looking ahead to the 2010 World Cup in South Africa, we expect Nike to capitalize on the opportunity again, particularly given their increased category," said Tan, who raised the six-month price target on the stock by 23 percent to $75.

In 2007, Nike acquired Umbro, the maker of the England football team's kit. (Reporting by Vidya Lakshmi in Bangalore; Editing by Deepak Kannan)

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