Canaccord Genuity upgrades Nike
Canaccord Genuity analyst Camilo Lyon upgraded Nike (NKE) from “neutral” to “buy” on September 11. The analyst particularly appreciated Nike’s decision to feature NFL quarterback Colin Kaepernick in its latest ad campaign.
“We believe Nike’s new ‘Just Do It’ ad campaign with Colin Kaepernick was a stroke of genius,” said Lyon. “This premeditated move was another subtle but significant sign of Nike’s strength and confidence in its position in the marketplace, one that likely does more good than harm,” he added. The analyst also raised Nike’s price target to $95, reflecting an upside of about 15% over the next 12 months.
About the ad campaign and its impact
On Tuesday, September 4, Nike named Kaepernick as the face of its ad campaign to mark the 30th anniversary for its “Just Do It” motto. Kaepernick ignited controversy in 2016 when he chose to kneel during the national anthem to protest racial discrimination and social inequality. Kaepernick hasn’t been signed by an NFL team since March 2017.
Some consumers protested the ad by burning Nike shoes and other gear and took to social media to condemn the company’s move with hashtags #BoycottNike and #JustBurnIt. President Trump condemned the ad campaign and said it sent a “terrible message.” The announcement led to a 3% fall in Nike’s stock price immediately. However, the company has been able to reverse the losses since then.
In fact, the sportswear giant saw its online sales rise after the ad campaign. According to the data released by Edison Trends, Nike’s online sales rose 31% between Sunday of Labor Day weekend and Wednesday compared to a 17% jump recorded in the same period last year.
Nike is among the top-performing stocks in the Dow Jones Index so far this year. The company has gained more than 32% YTD.