We are maintaining our buy rating and $75 price target on Nike Inc. (NKE). The firm's strong brand and product pipeline have enabled it to raise prices and increase sales of both its apparel and footwear, suggests John Staszak, analyst with Argus Research, a leading independent research firm.

We think some retailers seeking to boost weak sales are turning to Nike to increase customer traffic, increasing its bargaining power as a supplier.

Meanwhile, in response to changing purchasing trends, Nike is beefing up its direct-to-consumer (DTC) channel (company-owned stores and website), particularly its e-commerce business and we expect DTC sales to grow at a high-teens pace over the next two years.

Over the long term, we expect Nike to continue to dominate the athletic apparel and footwear market, and note that it has a particularly strong presence in high-end footwear,  thanks to its marketing strength and endorsements from famous athletes.

In the near term, we expect an accelerating U.S. economy, strong e-commerce sales and solid results in China to benefit earnings. Our financial strength rating for Nike remains High, the top of our five-point scale. Nike has a strong balance sheet, very low debt, and enough cash to cover all current obligations.

Based on the firm's investments in its company-owned stores, management's ability to execute its growth strategies and fourteen straight quarters of positive earnings surprises, we are maintaining our FY18 EPS estimate at $2.50. For FY19, we are keeping our forecast at $2.80.

Although the industry remains fiercely competitive, we expect the company to build on its dominant position through its globally recognized brand, innovative products, economies of scale, and rapid growth in emerging markets.

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