Raymond James: Nike’s Instagram deal could send share price up 20%
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Raymond James: Nike’s Instagram deal could send share price up 20%

Raymond James has declared that Nike is its “top pick” in the consumer sector, thanks to announcements that the luxury sporting apparel seller is pursuing various Ecommerce and direct-to-customer sales routes. The firm is not alone in responding positively to the news. Taken in tandem with Nike’s recent fourth-quarter earnings beat, it has served to push the share price higher over the last month.

Nike shares rally over 30-days as investors weigh up company’s plans

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SOURCE: Yahoo Finance

Raymond James analyst Cedric Lecasble wrote in a note to investors last Thursday:

"The growing influence of Millennials is radically transforming the sporting goods industry. Nike's approach to social media and Ecommerce has radically evolved for the better recently, in our view … Leading brands' online growth will outpace retailers' as they develop customization capabilities (Nike and Adidas lead the game) and improve their collaboration with Amazon."

As Nike announced its last earnings win, the company also said it would start selling directly to customers through Amazon and Instagram. This is a bold move that reverses Nike’s longstanding previous strategy. Lecasble thinks that this shifting of the sports apparel sales battle online will aid Nike against its rivals, because it “has by far the largest number of followers” on social media.

He also feels that Nike has other advantages in the marketing stakes. He wrote: "As far as athletes' endorsements are concerned, we believe Nike is still at a competitive advantage versus its main rivals. Strong inflation in athlete/team endorsements has given a clear advantage to the player with the deepest pockets."

Disclosure

Dominion holds Nike in its Global Trends Luxury Fund.


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The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.