What happened

Shares of Nike (NKE -0.18%) rose 4.7% on Thursday after two analysts issued bullish notes on the athletic apparel giant.  

So what

JPMorgan analyst Matthew Boss reiterated his overweight rating on Nike's stock. Following his meeting with management, he sees its share price rising roughly 23% to $164.

Despite a surge in COVID-19 infections that's driven Chinese authorities to reinstitute lockdowns in several major cities, Boss expects Nike's sales in China to strengthen in the fourth quarter. He also thinks the footwear titan's gross margin could improve, as consumer demand rebounds and inventory levels remain lean. 

A miniature gold bull is on top of keyboard button labeled buy.

Image source: Getty Images.

UBS analyst Jay Sole shared Boss' optimistic view of Nike's prospects. Sole repeated his buy rating on Nike's shares after talking with CFO Matt Friend. 

Sole expects Nike to generate robust e-commerce sales in North America. He also believes coronavirus-related disruptions are largely accounted for in Nike's somewhat conservative mid-single-digit sales growth forecast for fiscal 2022. Longer term, he sees the company's heavy spending on product development, supply chain improvements, and online channels driving "a multiyear period of above-average growth."

Now what

Nike's revenue rose 5% to $10.9 billion in the third quarter, which ended on Feb. 28. A 19% jump in digital sales helped to fuel the gains.

Better still, Nike's gross margin increased 1 percentage point to 46.6%, due in part to reduced discounting during the period. Higher direct sales, which tend to be more profitable than the company's wholesale business, also contributed to Nike's margin expansion.

If Boss and Sole are correct, investors can expect further improvements in these financial metrics in the coming quarters.