Nike’s Kaepernick ad was ‘good publicity,’ Piper Jaffray says

Despite consumer backlash against Nike‘s Colin Kaepernick ad campaign, one analyst says the publicity should bode well for the company’s bottom line.

“We view the publicity as good publicity,” Erinn Murphy, Piper Jaffray senior research analyst, wrote in a note to clients Monday. “The controversy has not only bred commerce, but we view the influential consumers of the brand (think sneakerheads, GenZ, Millennials) stand with Nike on this ad.”

Nike featured Kaepernick, a former San Francisco 49ers quarterback who knelt during the 2016 National Football League season during the national anthem to protest racial injustice, in its 30th anniversary of the famous “Just Do It” campaign.

Other athletes joined Kaepernick’s 2016 protest, sparking a controversy that drew the attention of President Donald Trump and has been linked to declining television ratings for National Football League games. Nike has continued its 2011 endorsement of Kaepernick despite the fact that he has not signed with an NFL team.

This isn’t the first time the apparel company has run a controversial campaign— it’s known for “pushing the boundaries of social and cultural norms,” Murphy said. She highlighted Michael Jordan’s NBA banned shoes in the 1980s, Charles Barkley’s “I Am Not A Role Model” in 1993, Lance Armstrong’s “What Am I On?” in 2001, gender equality campaigns, HIV/AIDS in 1995, and its ‘What Will They Say About You” campaign in 2017.

“We remind investors Nike has consistently grown over time despite other controversial campaigns,” Murphy said. “Bottom line, we believe history has proven it is much more valuable to ‘be there/visible’ for major sports and social moments than to offer up a neutral position or no stance.”

The Kaepernick ad prompted a boycott from some consumers who were upset over its use of the polarizing quarterback. The stock dropped following the ad’s debut, but Nike’s online sales surged in the immediate few days thereafter and shares are up 1.8 percent this week.

The company drew 170,000 new Instagram followers and record “likes,” last week, even amidst a wave of anti-Nike comments, according to Wedbush Securities, which has a $90 price target on the stock.

Piper Jaffray meanwhile is still “overweight” and “remains positive” on the apparel maker thanks to solid domestic demand, strength in China and ongoing traction in Europe. The firm has a $93 price target on the stock, roughly 11 percent above where the stock closed on Friday. Nike shares are up 33 percent this year alone, and were trading near $84 Monday.