Oakley, which makes footwear, performance eyewear, watches and athletic equipment, continued to gain ground Thursday in the wake of better-than-expected first-quarter gains and an analyst upgrade.

The company's share price was up more than five per cent or $1.03 in midday trading at $19.82 a share. That compares with a 52-week high of $22.50 a share and a 52-week low of $9.43 a share.

Foothill Ranch, Calif-based Oakley reported Wednesday that profit in the three months ended March 31 jumped 65 per cent to $9.1m or 13 cents a share from $5.5m or eight cents a share a year earlier. Analysts had been on average estimating per-share earnings of 11 cents.

Sales rose 49 per cent to $93.8m from $63.1m previously.

As well, Oakley, projected a 34 per cent increase in 2001 profit to 98 cents a share.

"Our momentum continued unabated in the first quarter,'' said chairman and CEO Jim Jannard. "We expanded our presence in each of the categories in which we now compete and believe they offer us the potential to grow to be a $1bn brand.

Merrill Lynch analyst David Campbell raised his recommendation on Oakley to near-term 'accumulate' from near-term 'neutral,' setting a 12-month target share price of $25. He also has a long-term 'buy' rating.

Jennifer Black at Wells Fargo Van Kasper reiterated her 'strong buy' rating, setting a target price of $36 a share. She also increased her profit estimate to 21 cents from 18 cents in the fourth quarter: to $1.01 from 98 cents in 2001, and to $1.22 from $1.20 in 2002.

"Few public companies have recently been able to meet or exceed Street expectations. Not only was Oakley Inc able to do that, but it met or exceeded them for the tenth consecutive quarter," said Black. "In the midst of earnings warnings, lingering winter weather and an economy that needs a boost, Oakley reported record sales, in addition to earnings that increased an astounding 63 per cent.

Black pointed out that Oakley is successfully diversifying into new product categories, its order backlog is up 135 per cent at a record $52.8m and its inventories are down.

She said that its footwear, apparel and watch lines continue to perform well while its sunglasses division is outpacing the rest of the industry.

"We believe that Oakley's tremendous momentum during the first quarter should continue throughout the rest of the year," said Black. "We believe that Oakley's Q1 performance is only the beginning and see Q4 as having the most upside potential, based on new product launches throughout the year."

In 2000, Oakley saw its profit soar 83 per cent to $51.1m or a record 73 cents a share from $28m or 40 cents a share. Sales in 2000 grew by 41 per cent to $363.5m from $257.9m in 1999.