Merrill Lynch upgrades Reebok (RBK) to near-term buy.
Analyst Virginia Genereux says that while she believes Reebok is fundamentally a 2003 story, she thinks the stock has bottomed. She says the company's significant operating leverage potential makes risk/reward attractive. She raises $0.05 4Q EPS estimate to $0.07, $1.68 in 2002 to $1.76, noting that EPS upside is coming primarily from operating expense control and slightly higher gross margins (given healthy inventory levels, stable European currencies). She thinks that share can hit $31 each within next six months. To go higher, will need to see more top-line growth, which has to come from new products.