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A Nike store in Dallas.

An improved product pipeline, stronger momentum in the U.S. and a controversial — but buzzy — ad campaign are drawing praise for Nike Inc. ahead of its first-quarter earnings report Tuesday.

Several analysts believe the firm — which saw its flagship brand shoulder decelerating momentum in North America last year amid increased competition from Adidas and streetwear brands like Supreme — has locked down a viable strategy to upend competition and maintain its dominance.

“After two years of a soft product cycle that led to increased inventory levels, higher discounting, margin compression and market share declines, Nike has regained its footing and is solidly marching back to top form,” wrote Canaccord Genuity Inc. analyst Camilo Lyon on Sept. 11, upgrading the stock from hold to buy and raising his price target to $95 (from $78). “Since last year’s announcement of its new ‘Triple Double’ strategy, Nike has most notably accelerated its product engine as evidenced by a flurry of new innovations and marquee collaborations.”

What’s more, Lyon noted that Q1 has historically served as a strong period for the Swoosh — which is up against “easier” comps this time around.

Overall, consensus estimates peg the firm’s Q1 sales at $9.9 billion — a gain of nearly 10 percent over last year’s same period — earnings at 62 cents per share, an improvement of 9 percent.

But bullish market watchers expect Nike to surpass those numbers pushing its shares up around 5 percent tomorrow — on the heels of an all-time high this month.

“Typically, when Nike comes out of a protracted innovation lull — the likes of which they have been experiencing over the past year and a half to two years — they do what they’re doing now,” Lyon said. “They speed up their innovation, they accelerate their creative process, and the product of that is a tremendous amount of new and exciting offerings. That’s just what we’re starting to see. We think Nike is on the cusp of a multiyear sales acceleration run.”

And, if that is the case, Lyon suggests there could be further upside to the stock.

Similarly, Susquehanna Financial LLLP analyst Sam Poser last week pushed his price target for Nike shares to $100, from $93, citing better footwear and apparel sales momentum led by Nike Sportswear. Poser also pointed to a recent marketing campaign and a resurgence at Jordan Brand as boons to business.

“Nike has allayed our concerns by successfully navigating the difficult path of balancing scale versus scarcity in North America,” Poser wrote on Sept. 20, of the firm that clocked a return to growth in the region in Q4. “Nike is tactically managing the supply of key franchises in the marketplace, particularly Brand Jordan. As such, the pull model is beginning to work again, and the Nike brand is being enhanced.”

Shares for Nike had soared to an all-time high on Sept. 14 — ending the trading day at $83.49 — on the heels of a prickly week that saw the firm face backlash over an ad featuring polarizing ex-footballer Colin Kaepernick. He gained notoriety for kneeling during games’ National Anthems to protest racial discrimination.

Calls for a boycott — including a full-blown ban in Louisiana — and a small wave of sneaker burning across social media briefly sent the firm’s stock down a modest 2 to 3 percent, but the controversy appeared to ultimately prove fruitful for the brand, which has a history rooted in supporting social causes. (The Nike ban in Louisiana has since been rescinded.)

Since the ad debuted — first with an image shared on social media by Kaepernick on Sept. 2, then with a TV spot on Sept. 6 — sales and online mentions of Nike have reportedly skyrocketed, with some sources citing as much as a 31 percent climb in online sales after the campaign.

Digital gains would align perfectly with the brand’s long-term strategy. President and CEO Mark Parker told investors at its annual general meeting on Thursday that he continues to expect revenues from digital, both owned and partnered, to increase to more than 30 percent of overall business in the next few years.

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Nike Q1 Earnings: Proof It Isn't Budging From the No. 1 Spot
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